U.N. KRISHNAMURTHY (SINCE DECEASED) THR. LRS. versus A. M. KRISHNAMURTHY on 12 July 2022

SUPREME COURT REPORTS

[2022] 13 S.C.R.

AU.N. KRISHNAMURTHY (SINCE DECEASED) THR. LRS.

v.

A. M. KRISHNAMURTHY

(Civil Appeal No. 4703 of 2022)

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JULY 12, 2022

[INDIRA BANERJEE AND HRISHIKESH ROY, JJ.]

Specific Relief Act, 1963 – s.16 (prior to amendment w.e.f1.10.2018) – Readiness and willingness to perform – Bothingredients necessary for the relief of specific performance – SuitCfor specific performance of an agreement for sale – Certain amountpaid in advance, failure to pay balance within stipulated time –Grant of relief – Not justified – Held: There is a distinction betweenreadiness and willingness to perform the contract and bothingredients are necessary for the relief of Specific Performance –DPlaintiff has to prove that all along and till the final decision of thesuit, he was ready and willing to perform his part of the contract –Mere statement or averment in plaint of readiness and willingnesswould not suffice – In the present case, the respondent-plaintifffailed to prove his readiness to perform his part of contract fromthe date of execution of the agreement till date of decree, a conditionEprecedent for grant of relief of specific performance – Respondentdeposited the balance sale consideration in the court seven yearsafter the date by which the sale had to be concluded – He did nothave sufficient funds to discharge his part of contract – No evidencewas adduced as to how he was in a position to pay or makeFarrangements for payment of the balance sale consideration withintime – Making subsequent deposit of balance consideration afterlapse of seven years would not establish the respondent’s readinessto discharge his part of contract – Respondent was not entitled tothe relief of specific performance as he was not ready with fundsthough may have been willing to perform his part of contract –GImpugned judgment of High Court and the decree of Trial court setaside – Appellants-defendant to return the earnest money to therespondent with interest @ 7% p.a from the date of deposit of thesame, till the date of refund.

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Suit – For specific performance of an agreement – Certainamount paid in advance, balance to be paid within a stipulatedtime – Held: In a suit for Specific Performance of an agreement, itis for the Plaintiff to prove his readiness and willingness to performhis obligations under the agreement – Where a certain amount hasbeen paid in advance and the balance is required to be paid withina stipulated time, it is for the Plaintiff to show that he was in aposition to pay the balance money – Plaintiff has to prove that hehas the money or has alternatively made necessary arrangementsto get the money.

Suit – For specific performance– Continuous readiness andwillingness of plaintiff – Held: Even in a first appeal, the firstAppellate Court is duty bound to examine whether there wascontinuous readiness and willingness on the part of the Plaintiff toperform the contract.

Allowing the appeal, the Court

HELD: 1.1 The primary question for determination iswhether the Respondent Plaintiff has proved his readiness andwillingness to perform his part of the contract or not? In a suitfor Specific Performance of an agreement, it is for the Plaintiff toprove his readiness and willingness to perform his obligationsunder the agreement. Where a certain amount has been paid inadvance and the balance is required to be paid within a stipulatedtime, it is for the Plaintiff to show that he was in a position to paythe balance money. The Plaintiff has to prove that he has themoney or has alternatively made necessary arrangements to getthe money. In this case, the Original Defendant/Appellants haveall along contended that the Plaintiff Respondent neither offeredto pay nor was in a position to pay the balance consideration ofRs.15,00,000/-. [Paras 21, 22][260-F-H]

1.2 Section 16 (c) of the Specific Relief Act, 1963 bars therelief of specific performance of a contract in favour of a person,who fails to aver and prove his readiness and willingness toperform his part of contract. In view of Explanation (i) to clause(c) of Section 16, it may not be essential for the plaintiff to actuallytender money to the defendant or to deposit money in Court, AB

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Aexcept when so directed by the Court, to prove readiness andwillingness to perform the essential terms of a contract, whichinvolves payment of money. However, explanation (ii) says theplaintiff must aver performance or readiness and willingness toperform the contract according to its true construction. To averand prove readiness and willingness to perform an obligation toBpay money, in terms of a contract, the plaintiff would have to makespecific statements in the plaint and adduce evidence to showavailability of funds to make payment in terms of the contract intime. In other words, the plaintiff would have to plead that theplaintiff had sufficient funds or was in a position to raise funds inCtime to discharge his obligation under the contract. If the plaintiffdoes not have sufficient funds with him to discharge his obligationsin terms of a contract, which requires payment of money, theplaintiff would have to specifically plead how the funds would beavailable to him. To cite an example, the plaintiff may aver andprove, by adducing evidence, an arrangement with a financier forDdisbursement of adequate funds for timely compliance with theterms 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 Courtis required to pose unto itself the following questions, namely:-E(i) Whether there is a valid agreement of sale binding on boththe vendor and the vendee and (ii)Whether the Plaintiff has allalong been and still is ready and willing to perform his part of thecontract as envisaged under Section 16(c) of the Specific ReliefAct, 1963. There is a distinction between readiness andFwillingness to perform the contract and both ingredients arenecessary for the relief of Specific Performance. Even in a firstappeal, the first Appellate Court is duty bound to examine whetherthere was continuous readiness and willingness on the part ofthe Plaintiff to perform the contract. [Paras 33-35][265-B-E]

G1.4 In this case, the suit property is located in the industrialtown of Hosur located about 30/40 kms. from Bengaluru. TheCourt is obliged to take judicial notice of the phenomenal rise inthe price of real estate in Hosur. It was argued that the Plaintiffhad only paid an insignificant amount of Rs.10,001/- as advance H

when the consideration was Rs.15,10,000/-. Having paid aninsignificant amount the Plaintiff was not entitled to discretionaryequitable relief of Specific Performance. The fact that the suithad been filed after three years, just before expiry of the periodof limitation, was also a ground to decline the Respondent Plaintiffthe equitable relief of Specific Performance for purchase ofimmovable property. The Respondent Plaintiff has relied uponthe notice dated 13.02.2003 and evidences of PW2 & PW3 toprove that he was always ready and willing to perform his part ofthe contract. Even though it may be true that the RespondentPlaintiff had deposited the balance sale consideration in court on06.04.2010, it cannot be ignored that such deposit was made byhim seven years after 15.3.2003, being the date by which thesale had to be concluded. No evidence has been adduced on behalfof the Respondent Plaintiff as to how the Respondent Plaintiffwas in a position to pay or make arrangements for payment of thebalance sale consideration within time. The Courts below alsoerred in not adjudicating upon this vital issue except to make asweeping observation that, given that the Respondent Plaintiffwas a businessman he had sources to arrange the balance funds.Careful study of balance sheet dated 31.03.2003 of theRespondent Plaintiff would demonstrate that he did not havesufficient 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 toprove that all along and till the final decision of the suit, he wasready and willing to perform his part of the contract. It is thebounden duty of the Plaintiff to prove his readiness andwillingness by adducing evidence. This crucial facet has to bedetermined by considering all circumstances including availabilityof funds and mere statement or averment in plaint of readinessand willingness, would not suffice. In this case, the RespondentPlaintiff has failed to discharge his duty to prove his readiness aswell as willingness to perform his part of the contract, by adducingcogent evidence. Acceptable evidence has not been placed onrecord to prove his readiness and willingness. Further, it is clearfrom the Respondent Plaintiff’s balance sheet that he did not havesufficient funds to discharge his part of contract in March 2003.Making subsequent deposit of balance consideration after lapse AB

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254SUPREME COURT REPORTS

[2022] 13 S.C.R.

Aof seven years would not establish the Respondent Plaintiff’sreadiness to discharge his part of contract. The RespondentPlaintiff has failed to prove his readiness to perform his part ofcontract from the date of execution of the agreement till date ofdecree, which is a condition precedent for grant of relief of specificperformance. The Respondent Plaintiff was not entitled to theBrelief of specific performance. The Respondent Plaintiff may havebeen willing to perform his part of contract. It however appearsthat he was not ready with funds. He was possibly trying to buytime to discharge his part of contract. The Respondent Plaintiffwas not entitled to the relief of specific performance. The TrialCCourt and the High Court erred both in law and on facts in grantingsuch relief. The impugned judgment of the High Court and thejudgment and decree of Trial court are set aside. The Appellantsshall return the earnest money to the Respondent Plaintiff, within4 weeks from today with interest at the rate of 7% per annumfrom the date of deposit of the same, till the date of refund. It willDalso be open to the Respondent Plaintiff to withdraw the depositif any of the balance consideration in Court. [Paras 46-49, 51 and52][271-D-G; 272-B-C, G]

Bhavyanath v. K. V. Balan (2020) 11 SCC 790 – heldinapplicable.E

Man Kaur v. Hartar Singh Sangha (2010) 10 SCC 512: [2010] 12 SCR 515; In Pt. Prem Raj v. D.L.F. Housingand Construction (Private) Ltd. And Anr. AIR 1968 SC1355 : [1968] 3 SCR 648; N. P. Thirugnanam v.Dr. R. Jagan Mohan Rao and Ors (1995) 5 SCC 115 :F[1995] 2 Suppl. SCR 53; Umabai v. Nilkanth DhondibaChavan (2005) 6 SCC 243 : [2005] 3 SCR 521; K.S.Vidyanadam v. Vairavan (1997) 3 SCC 1 : [1997] 1SCR 993; His Holiness Acharya Swami Ganesh Dassjiv. Sita Ram Thapar (1996) 4 SCC 526 : [1996] 2 Suppl.GSCR 111; Kalawati v. Rakesh Kumar (2018) 3 SCC658 : [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] 2SCR 120; Malluru Mallappa v. Kuruvathappa (2020)4 SCC 313; Saradamani Kandappan v. S. Rajalakshmi H

U.N. KRISHNAMURTHY (SINCE DECEASED) THR. LRS. v.A. M. KRISHNAMURTHY

(2011) 12 SCC 18 : [2011] 8 SCR 874; P.R. Deb andAssociates v. Sunanda Roy (1997) 3 SCC 1; ManjunathAnandappa v. Tammanasa (2003) 10 SCC 390 : [2003]2 SCR 1068; Azhar Sultana v. B. Rajamani (2009) 17SCC 27 : [2009] 2 SCR 537; Atma Ram v. CharanjitSingh (2020) 3 SCC 311 : [2020] 3 SCR 697 – reliedon.

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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.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4703of 2022.

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From the Judgment and Order dated 30.10.2017 of the High Courtof 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.

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AN. D. B. Raju, M. A. Chinnasamy, Ms. C. Rubavathi, Ch. LeelaSarveswar, T. Meikandan, P. Rajaram, V. Senthil Kumar, Advs. for theRespondent.

The Judgment of the Court was delivered by INDIRA BANERJEE, J.

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Leave granted.

2. Heard Mr. Krishnan Venugopal learned Senior Advocateappearing with Mr. Mahesh Thakur, AOR on behalf of Appellants andMr. N.D.B Raju, learned Advocate appearing with Mr. M.A.CChinnasamy, AOR on behalf of Respondent.

3. This Appeal is against a final judgment and decree dated30[th] October 2017 passed by the High Court of Judicature at Madras,dismissing the Appeal Suit No. 262 of 2011 filed by the Appellants andconfirming a judgment and order and decree dated 30[th] November 2010Dpassed by the Principal District Judge, Krishnagiri, hereinafter referredto as “the Trial Court” in Original Suit No. 30 of 2005 filed by theRespondent Plaintiff, for specific performance of an agreement for saleof 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 aboutE9[th] 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 25[th] 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 11[th] November 2002,Fwhile the original Defendant was getting the suit property whitewashed,a real estate agent Mr. N. Anjappa approached the original Defendantwith 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 agreedto sell the suit property to the Respondent Plaintiff, in the presence ofGMr. N. Anjappa, Mr. S.A. Muralidharan and Mr. M. Murali Reddy. Theterms and conditions of the agreement for sale of the suit property wererecorded by the original Defendant U.N. Krishnamurthy in his ownhandwriting in a letter dated 11[th] November 2002 given by the originalDefendant to the Respondent Plaintiff.

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7. It is the case of the Respondent Plaintiff that the originalDefendant agreed to sell the suit property to the Respondent Plaintifffor 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 Plaintiffwould get the sale deed registered on or before 15[th] March 2003, uponpayment of the full sale consideration. The agreement was allegedlywitnessed by the real estate agent, Mr. N. Anjappa.

8. According to the Respondent Plaintiff, the Respondent Plaintiffapproached the original Defendant with the balance consideration severaltimes and requested the original Defendant to execute the sale deed inhis favour, but the original Defendant kept postponing execution of thesale deed on one pretext or the other.

9. On or about 13[th] February 2003, the Respondent Plaintiff issueda legal notice to the original Defendant through his lawyer stating thatthe Respondent Plaintiff is ever ready and willing to perform his part ofthe contract and called upon the original Defendant to execute the saledeed in favour of Respondent Plaintiff after receiving the balanceconsideration. By a letter dated 10[th] March 2003 sent in response to theaforesaid legal notice, the original Defendant denied having entered intoany oral sale agreement for sale of the suit property.

10. On 8[th] October 2005, the Respondent Plaintiff allegedlyapproached the original Defendant with a request to receive the balanceconsideration and to execute the sale deed in favour of the RespondentPlaintiff. It is alleged that the original Defendant went back upon hispromise and refused to accede to the request made by the RespondentPlaintiff.

11. In the circumstances, on or about 17[th] October 2005, theRespondent Plaintiff filed the suit. The original Defendant filed a writtenstatement denying the allegations in the plaint. In the written statement,the original Defendant denied the execution of any agreement for saleof the suit property for consideration of Rs.15,10,000/- as alleged.

12. The original Defendant has categorically stated that he didnot agree to sell the suit property to the Respondent Plaintiff as allegedand that he did not receive any advance on 11[th] November 2002 asalleged or on any other date. It is the case of the Appellants that therewas no concluded contract to sell the suit property. In the written A

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Astatement it is also pleaded that in any case, the Respondent Plaintiffwas 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 1[st] week ofNovember, 2002 is true?

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2. Whether the alleged confirmation letter dated 11.11.2002is true and valid?

3. Whether there is no concluded contract between the plaintiffand defendant is true?

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4. Whether the plaintiff always ready and willing to performhis part of contract?

5. Whether the plaintiff is entitled to get the relief of specificperformance and possession?

6. To what relief the plaintiff is entitled to?”

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14. The Respondent Plaintiff examined three witnesses and theoriginal Defendant deposed as witness on his own behalf. By a judgmentand order dated 30[th] November 2010, the Trial Court decreed the suitand directed the original Defendant to receive the balance saleconsideration of Rs.15 lakhs and execute the sale deed in favour of theERespondent Plaintiff.

15. All the issues framed by the Trial Court were answered infavour of the Respondent Plaintiff. The Trial Court found that theRespondent Plaintiff was ready and willing to perform his part of thecontract, and thus entitled to the relief of specific performance. TheFrelevant part of judgment of the Trial Court is set out hereinbelow:-

“21. But I already discussed that the plaintiff is a businessmanand he is having sufficient means to pay the amount to thedefendant Rs.15,00,000/- also deposited into court. Theamount has not shown in Ex. A4 to A6 is not the ground fordenying the prayer. The plaintiff is also ready and willing toperform his contract and in view of the above discussions,the plaintiff is entitled the relief of Specific performance andpossession of schedule property. Accordingly, I answered theIssues Nos.4 and 5.”

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16. By the impugned judgment and order dated 30[th] October 2017,the High Court upheld the judgment and decree passed by the TrialCourt, holding that the Respondent Plaintiff had always been ready andwiling to perform his part of the contract. The relevant part of theimpugned 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 registeredsale deed. The consistent case of the plaintiff is that despiteof repeated demands, the defendant has not come forward toexecute a sale deed in favour of the plaintiff and therefore, alegal notice has been issued. Ex.A2 is a copy of the legalnotice dated 13.02.2003 and the same has also been receivedby the defendant. After receipt of the same he has given afalse reply notice dated 10.03.2003. Since on the side of theplaintiff, necessary documentary and oral evidence have beenlet in, it is easily discernible that the plaintiff has always beenready and willing to perform his part of the contract.Therefore, the fourth contention put forth on the side of theappellants/defendant[s] also goes out without merit.

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20. It has already been discussed in detail that the suit propertyis the absolute property of the defendant. From the evidencegiven by the defendant [D.W.1], the Court can very well cometo conclusion that the entire transaction is based upon onoral sale agreement emerged between the plaintiff anddefendant. Further, the plaintiff has shown his readiness andwillingness to perform his part of the contract. Therefore,viewing from any angle, the contentions put forth on the sideof the appellants /defendants[s] cannot be accepted.”

17. Mr. Krishnan Venugopal, learned Senior Counsel appearingon behalf of the Appellants argued that both the Trial Court and the HighCourt committed an error on facts and also in law. According to him theissue relating to “readiness and willingness” on the part of the RespondentPlaintiff, 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 adducedany evidence to demonstrate continuous “readiness and willingness”

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Awhich the Respondent Plaintiff was required to prove, regardless of anydefault by the original Defendant. Mr. Venugopal also argued that theCourt should also take judicial notice of the steep rise in the price of realestate, before granting the discretionary relief of specific performance.

18. Mr. N.D.B. Raju appearing on behalf of the RespondentBPlaintiff submitted that the issues framed by the Trial Court of whetherthere was a concluded contract between the Plaintiff and the Defendant,and whether the Plaintiff was always ready and willing to perform hispart of the contract were factual issues determinable on evidence.

19. Mr. Raju argued that this Court should not disturb theCconcurrent factual findings of the Trial Court and the High Court ofreadiness and willingness of the Respondent Plaintiff to perform his partof the contract.

20. Mr. Raju has emphatically argued that the Respondent Plaintiffwas ever ready and willing to perform his part of the contract and thatDthe original Defendant had been delaying the execution of the sale deed.To prove readiness and willingness of the Respondent Plaintiff, Mr. Rajureferred to the testimony of the Plaintiff’s witnesses, N. Anjappa (PW2) and S.A. Muralidharan (PW3) who have stated that the RespondentPlaintiff had on multiple occasions, before the cut-off date of 15.03.2003approached the original Defendant for execution of the sale deed, butEthe original Defendant delayed the execution of the sale deed.

21. It is well settled that, in a suit for Specific Performance of anagreement, it is for the Plaintiff to prove his readiness and willingness toperform his obligations under the agreement. Where a certain amounthas been paid in advance and the balance is required to be paid within aFstipulated time, it is for the Plaintiff to show that he was in a position topay the balance money. The Plaintiff has to prove that he has the moneyor has alternatively made necessary arrangements to get the money. Inthis case, the Original Defendant/Appellants have all along contendedthat the Plaintiff Respondent neither offered to pay nor was in a positionGto pay the balance consideration of Rs.15,00,000/-.

22. The primary question for determination is whether theRespondent Plaintiff has proved his readiness and willingness to performhis part of the contract or not?

23. Section 16 of the Specific Relief Act, 1963, as it stood at thematerial time (prior to amendment with effect from 1.10.2018), interalia, provides:- “16. Personal bars to relief.—Specific performance of acontract cannot be enforced in favour of a person—

(a) who would not be entitled to recover compensation forits breach; or (b) who has become incapable of performing, or violatesany essential term of, the contract that on his part remainsto be performed, or acts in fraud of the contract, or wilfullyacts at variance with, or in subversion of, the relationintended to be established by the contract; or

(c) who fails to aver and prove that he has performed orhas always been ready and willing to perform the essentialterms of the contract which are to be performed by him,other than terms the performance of which has beenprevented or waived by the defendant.

Explanation. —For the purposes of clause (c), —

(i) where a contract involves the payment of money, it is notessential for the plaintiff to actually tender to the defendantor to deposit in court any money except when so directed bythe court;

(ii) the plaintiff must aver performance of, or readiness andwillingness to perform, the contract according to its trueconstruction.”

24. Section 16 (c) of the Specific Relief Act, 1963 bars the reliefof specific performance of a contract in favour of a person, who fails toaver and prove his readiness and willingness to perform his part ofcontract. In view of Explanation (i) to clause (c) of Section 16, it maynot be essential for the plaintiff to actually tender money to the defendantor to deposit money in Court, except when so directed by the Court, toprove readiness and willingness to perform the essential terms of acontract, which involves payment of money. However, explanation (ii)says the plaintiff must aver performance or readiness and willingness toperform the contract according to its true construction.

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A25. To aver and prove readiness and willingness to perform anobligation to pay money, in terms of a contract, the plaintiff would haveto make specific statements in the plaint and adduce evidence to showavailability of funds to make payment in terms of the contract in time. Inother words, the plaintiff would have to plead that the plaintiff hadsufficient funds or was in a position to raise funds in time to dischargeBhis obligation under the contract. If the plaintiff does not have sufficientfunds with him to discharge his obligations in terms of a contract, whichrequires payment of money, the plaintiff would have to specifically pleadhow the funds would be available to him. To cite an example, the plaintiffmay aver and prove, by adducing evidence, an arrangement with aCfinancier for disbursement of adequate funds for timely compliance withthe terms and conditions of a contract involving payment of money.

26. In Man Kaur v. Hartar Singh Sangha[1], this Court held that:

“40. …..A person who fails to aver and prove that he hasperformed or has always been ready and willing to performthe essential terms of the contract which are to be performedby him (other than the terms the performance of which hasbeen prevented or waived by the defendant) is barred fromclaiming specific performance. Therefore, even assuming thatthe defendant had committed breach, if the plaintiff fails toaver in the plaint or prove that he was always ready andwilling to perform the essential terms of contract which arerequired to be performed by him (other than the terms theperformance of which has been prevented or waived by theplaintiff), there is a bar to specific performance in his favour.Therefore, the assumption of the respondent that readinessand willingness on the part of the plaintiff is something whichneed not be proved, if the plaintiff is able to establish that thedefendant refused to execute the sale deed and therebycommitted breach, is not correct. Let us give an example. Takea case where there is a contract for sale for a considerationof Rs. 10 lakhs and earnest money of Rs. 1 lakh was paidand the vendor wrongly refuses to execute the sale deed unlessthe purchaser is ready to pay Rs. 15 lakhs. In such a casethere is a clear breach by the defendant. But in that case, ifthe plaintiff did not have the balance Rs. 9 lakhs (and the D

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money required for stamp duty and registration) or the capacityto arrange and pay such money, when the contract had to beperformed, the plaintiff will not be entitled to specificperformance, even if he proves breach by the defendant, ashe 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 speakingthrough Ramaswamy J. held that “it is well-settled that in a suit forspecific performance the plaintiff should allege that he is readyand willing to perform his part of the contract…..” and if the fact istraversed, he is required to prove a continuous readiness and willingnessfrom the date of the contract to the time of the hearing, to perform thecontract on his part. For such conclusion the learned Judge relied uponthe opinion of Lord Blanesburgh, in Ardeshir Mama v. Flora Sassoon[3].

28. In D.L.F. Housing and Construction (Pvt.) Ltd. (supra), inthe absence of an averment on the part of the Plaintiff in the plaint, thathe was ready and willing to perform his part of the contract, it was heldthat the Plaintiff had no cause of action so far as the relief for SpecificPerformance was concerned. In this case, of course, there is an avermentin the plaint that the Respondent Plaintiff was all along ready and willingto perform his obligations under the contract. The question is whetherthe Respondent Plaintiff had proved his readiness and willingness toperform his obligations under the contract.

29. In N.P. Thirugnanam v. Dr. R. Jagan Mohan Rao andOrs.[4], this Court reiterated that Section 16(c) of the Specific Relief Act,1963 envisages that the Plaintiff must plead and prove that he hadperformed or has always been ready and willing to perform the essentialterms of the contract which were to be performed by him other thanthose terms, the performance of which has been prevented or waivedby the Defendant. In N.P. Thirugnanam (supra) this Court said thatthe continuous readiness and willingness on the part of the Plaintiff wasa condition precedent for grant of the relief of Specific Performance.

30. This Court, in effect, held that for determining whether thePlaintiff 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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Anecessary for the Court to consider the conduct of the Plaintiff prior andsubsequent to filing the suit for specific performance. The relevant partof the judgment is extracted hereinbelow:–

“5. …Section 16(c) of the Act envisages that plaintiff mustplead and prove that he had performed or has always beenBready and willing to perform the essential terms of the contractwhich are to be performed by him, other than those terms theperformance of which has been prevented or waived by thedefendant. The continuous readiness and willingness on thepart of the plaintiff is a condition precedent to grant the reliefof specific performance. This circumstance is material andCrelevant and is required to be considered by the court whilegranting or refusing to grant the relief…”

31. In Umabai v. Nilkanth Dhondiba Chavan[5], this Court heldthat a finding as to whether the Plaintiffs were all along and still readyand willing to perform their part of the contract, was a mandatoryDrequirement under Section 16(c) of the Specific Relief Act. The Courtwould necessarily have to arrive at the finding that the Plaintiff all alongwere, and still are ready and also willing to perform their part of thecontract, taking into account the entirety of the pleadings as also theevidence brought on record. To quote this Court:-E

“So far there being a plea that they were ready and willing toperform their part of the contract is there in the pleading, wehave no hesitation to conclude, that this by itself is notsufficient to hold that the appellants were ready and willingin terms of Section 16(c) of the Specific Relief Act. This requiresFnot only such plea but also proof of the same. Now examiningthe first of the two circumstances, how could mere filing of thissuit, after exemption was granted be a circumstance aboutwillingness or readiness of the plaintiff. This at the most could bethe desire of the plaintiff to have this property. It may be for sucha desire this suit was filed raising such a plea. But Section 16(c)Gof the said Act makes it clear that mere plea is not sufficient, ithas to be proved.”

32. In K.S. Vidyanadam v. Vairavan[6], Justice B.P. Jeevan Reddysaid that grant of the relief of specific performance is discretionary and5 (2005) 6 SCC 243H6 (1997) 3 SCC 1

the Court is not bound to grant it. This Court further held that thoughtime is not of essence to a contract relating to transfer of property, suchcontracts need to be completed within a reasonable time period. Thusthe time element cannot be completely ignored.

33. In a suit for Specific Performance of a contract, the Court isrequired to pose unto itself the following questions, namely:-

(i) Whether there is a valid agreement of sale binding on boththe vendor and the vendee and

(ii) Whether the Plaintiff has all along been and still is ready andwilling to perform his part of the contract as envisaged underSection 16(c) of the Specific Relief Act, 1963.

34. There is a distinction between readiness and willingness toperform the contract and both ingredients are necessary for the relief ofSpecific Performance. In His Holiness Acharya Swami Ganesh Dassjiv. Sita Ram Thapar[7]cited by Mr. Venugopal, this Court said that therewas a difference between readiness and willingness to perform a contract.While readiness means the capacity of the Plaintiff to perform thecontract which would include his financial position, willingness relates tothe conduct of the Plaintiff. The same view was taken by this Court inKalawati v. Rakesh Kumar[8].

35. Even in a first appeal, the first Appellate Court is duty boundto examine whether there was continuous readiness and willingness onthe part of the Plaintiff to perform the contract. This proposition findssupport from Balraj Taneja v. Sunil Madan[9], and H.P. Pyarejan v.Dasappa[10] where this Court approved the views taken by the PrivyCouncil in Ardeshir Mama v. Flora Sassoon[11].

36. In Malluru Mallappa v. Kuruvathappa[12], this Courtobserved and held:- “13. It is a settled position of law that an appeal is acontinuation of the proceedings of the original court.Ordinarily, the appellate jurisdiction involves a rehearing on 7 (1996) 4 SCC 5268 (2018) 3 SCC 6589 (1999) 8 SCC 39610 (2006) 2 SCC 49611 AIR 1928 PC 20812 (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 thereinall questions of fact and law decided by the trial court areopen for reconsideration. Therefore, the first appellate courtis required to address itself to all the issues and decide thecase by giving reasons. The court of first appeal must recordits findings only after dealing with all issues of law as well asfact and with the evidence, oral as well as documentary, ledby the parties. The judgment of the first appellate court mustdisplay conscious application of mind and record findingssupported 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. NarayanaGowda 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 LakshmiDyeing Works v. Rangaswamy Chettiar [Sri Raja LakshmiDyeing Works v. Rangaswamy, (1980) 4 SCC 259]]

14. A first appeal under Section 96 CPC is entirely differentfrom a second appeal under Section 100. Section 100expressly bars second appeal unless a question of law isinvolved in a case and the question of law so involved issubstantial in nature.

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18. It is clear from the above provisions and the decisions ofthis Court that the judgment of the first appellate court has toset out points for determination, record the decision thereonand give its own reasons. Even when the first appellate courtaffirms the judgment of the trial court, it is required to complywith the requirement of Order 41 Rule 31 and non-observanceof this requirement leads to infirmity in the judgment of thefirst appellate court. No doubt, when the appellate courtagrees with the views of the trial court on evidence, it neednot restate effect of evidence or reiterate reasons given bythe trial court. Expression of a general agreement with thereasons given by the trial court would ordinarily suffice.

37. In H.P. Pyarejan v. Dasappa (supra), Justice Arijit Pasayatspeaking for this Court reversed the judgment of the High Court holdingthat High Court did not provide reasoning for its conclusion that Plaintiffwas ready and willing to perform his part of contract. To arrive at suchconclusion the Court had relied upon Cort v. Ambergate etc. and Rly.Co[13] where Lord Campbell observed that in common sense, the meaningof 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 propertyis located in the industrial town of Hosur located about 30/40 kms. fromBengaluru. The Court is obliged to take judicial notice of the phenomenalrise in the price of real estate in Hosur. The proposition finds supportfrom case reported in K.S. Vidyanadam v. Vairavan (supra). To quotethis Court “we cannot be oblivious to reality – and the reality isconstant and continuous rise in the values of urban properties -fuelled by large scale migration of people from rural areas to urbancentres and by inflation.”

39. Mr. Venugopal argued that the Plaintiff had only paid aninsignificant amount of Rs.10,001/- as advance when the considerationwas Rs.15,10,000/-. Having paid an insignificant amount the Plaintiffwas not entitled to discretionary equitable relief of Specific Performance,as observed by this Court in Saradamani Kandappan v. S.Rajalakshmi[14]. The relevant paragraph of the judgment of this Court isset out hereinbelow:- “37. The reality arising from this economic change cannotcontinue to be ignored in deciding cases relating to specificperformance. The steep increase in prices is a circumstancewhich makes it inequitable to grant the relief of specificperformance where the purchaser does not take steps tocomplete the sale within the agreed period, and the vendorhas not been responsible for any delay or non-performance.A purchaser can no longer take shelter under the principlethat time is not of essence in performance of contracts relatingto immovable property, to cover his delays, laches, breachesand “non-readiness”. The precedents from an era, when highinflation was unknown, holding that time is not of the essence 13 (1851) 117 ER 1229

14 (2011) 12 SCC 18

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Aof the contract in regard to immovable properties, may nolonger apply, not because the principle laid down therein isunsound or erroneous, but the circumstances that existed whenthe said principle was evolved, no longer exist. In these daysof galloping increases in prices of immovable properties, tohold that a vendor who took an earnest money of say aboutB10% of the sale price and agreed for three months or fourmonths as the period for performance, did not intend thattime should be the essence, will be a cruel joke on him, andwill result in injustice. Adding to the misery is the delay indisposal of cases relating to specific performance, as suitsCand appeals therefrom routinely take two to three decades toattain finality. As a result, an owner agreeing to sell a propertyfor rupees one lakh and receiving rupees ten thousand asadvance may be required to execute a sale deed a quartercentury later by receiving the remaining rupees ninetythousand, when the property value has risen to a crore ofDrupees.”

40. As argued by Mr. Venugopal, the fact that the suit had beenfiled after three years, just before expiry of the period of limitation, wasalso a ground to decline the Respondent Plaintiff the equitable relief ofSpecific Performance for purchase of immovable property.EMr. Venugopal’s argument finds support from the judgments of this Courtin P.R. Deb and Associates v. Sunanda Roy[15]; K.S. Vidyanadam v.Vairavan[16]; Manjunath Anandappa v. Tammanasa[17], Azhar Sultanav. B. Rajamani[18]; Saradamani Kandappan v. S. Rajalakshmi[19].

41. In K.S. Vidyanadam v. Vairavan (supra) this Court held:

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41. In K.S. Vidyanadam v. Vairavan (supra) this Court held:

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“10. It has been consistently held by the courts in India,following certain early English decisions, that in the caseof agreement of sale relating to immovable property, timeis not of the essence of the contract unless specificallyprovided to that effect. The period of limitation prescribedGby the Limitation Act for filing a suit is three years. From 15 (1996) 4 SCC 42316 (1997) 3 SCC 117 (2003) 10 SCC 39018 (2009) 17 SCC 27H19 (2011) 12 SCC 18

these two circumstances, it does not follow that any andevery suit for specific performance of the agreement (whichdoes not provide specifically that time is of the essence ofthe contract) should be decreed provided it is filed withinthe period of limitation notwithstanding the time-limitsstipulated in the agreement for doing one or the other thingby one or the other party. That would amount to sayingthat the time-limits prescribed by the parties in the agreementhave no significance or value and that they mean nothing.Would it be reasonable to say that because time is not madethe essence of the contract, the time-limit(s) specified inthe agreement have no relevance and can be ignored withimpunity? It would also mean denying the discretion vestedin the court by both Sections 10 and 20. As held by aConstitution Bench of this Court in Chand Rani v. KamalRani [(1993) 1 SCC 519] : (SCC p. 528, para 25)

“… it is clear that in the case of sale of immovable propertythere is no presumption as to time being the essence of thecontract. Even if it is not of the essence of the contract,the Court may infer that it is to be performed in a reasonabletime if the conditions are (evident?): (1) from the expressterms 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 relevantcircumstances including the time-limit(s) specified in theagreement and determine whether its discretion to grantspecific 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 adiscretionary jurisdiction, would be entitled to take intoconsideration as to whether the suit had been filed within areasonable time. What would be a reasonable time would,however, depend upon the facts and circumstances of eachcase. No hard-and-fast law can be laid down therefor. Theconduct of the parties in this behalf would also assumesignificance.

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A35. We, therefore, are of the opinion that interest of justicewould be subserved if this Court refuses to exercise itsdiscretionary jurisdiction in terms of Section 20 of the Act,directing the defendant to pay a sum of Rs. 60,000 to theplaintiff which sum would include the amount of advance paidby her.”B

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43. In Saradamani Kandappan (supra) this Court reiterated that(i) while exercising discretion in suits for Specific Performance, the Courtsshould bear in mind that when the parties prescribed a time for takingcertain steps or for completion of the transaction, that must have somesignificance and therefore time/period prescribed cannot be ignored; (ii)Cthe Courts will apply greater scrutiny and strictness when consideringwhether purchaser was ready and willing to perform his part of thecontract and (iii) every suit for Specific Performance need not be decreedmerely because it is filed within the period of limitation, by ignoring timelimits stipulated in the agreement. The courts will also frown upon suitsDwhich are not filed immediately after the breach/refusal. The fact thatlimitation is three years does not mean that a purchaser can wait for oneor two years to file a suit and obtain Specific Performance. The threeyear period is intended to assist the purchaser in special cases, as forexample where the major part of the consideration has been paid to thevendor and possession has been delivered in part performance, whereEequity shifts in favour of the purchaser.

44. In Atma Ram v. Charanjit Singh[20] Justice V.Ramasubramanian speaking for this Court made the following pertinentobservation:- F“9... No explanation was forthcoming from the petitioner forthe 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 aplaintiff is very crucial in a suit for specific performance. Aperson who issues a legal notice on 12.11.1996 claimingreadiness and willingness, but who institutes a suit only onG13.10.1999 and that too only with a prayer for a mandatoryinjunction carrying a fixed court fee relatable only to thesaid relief, will not be entitled to the discretionary relief ofspecific performance.”

H20 (2020) 3 SCC 311

45. The Respondent Plaintiff has relied upon the notice dated13.02.2003 and evidences of PW2 & PW3 to prove that he was alwaysready and willing to perform his part of the contract. Even though it maybe true that the Respondent Plaintiff had deposited the balance saleconsideration in court on 06.04.2010, it cannot be ignored that such depositwas made by him seven years after 15.3.2003, being the date by whichthe sale had to be concluded. No evidence has been adduced on behalfof the Respondent Plaintiff as to how the Respondent Plaintiff was in aposition to pay or make arrangements for payment of the balance saleconsideration within time. The Courts below also erred in not adjudicatingupon this vital issue except to make a sweeping observation that, giventhat the Respondent Plaintiff was a businessman he had sources toarrange the balance funds. Careful study of balance sheet dated31.03.2003 of the Respondent Plaintiff would demonstrate that he didnot have sufficient funds to discharge his part of contract.

46. It is settled law that for relief of specific performance, thePlaintiff 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 thebounden duty of the Plaintiff to prove his readiness and willingness byadducing evidence. This crucial facet has to be determined by consideringall circumstances including availability of funds and mere statement oraverment in plaint of readiness and willingness, would not suffice.

47. In this case, the Respondent Plaintiff has failed to dischargehis duty to prove his readiness as well as willingness to perform his partof the contract, by adducing cogent evidence. Acceptable evidence hasnot been placed on record to prove his readiness and willingness. Further,it is clear from the Respondent Plaintiff’s balance sheet that he did nothave sufficient funds to discharge his part of contract in March 2003.Making subsequent deposit of balance consideration after lapse of sevenyears would not establish the Respondent Plaintiff’s readiness todischarge his part of contract. Reliance may be placed on Umabai v.Nilkanth Dhondiba Chavan (supra) where this Court speaking throughJustice SB Sinha held that deposit of amount in court is not enough toarrive at conclusion that Plaintiff was ready and willing to perform hispart of contract. Deposit in court would not establish Plaintiff’s readinessand willingness within meaning of section 16(c) of Specific Relief Act.The relevant part of the judgment is reproduced below: - A

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A“45. …Deposit of any amount in the court at the appellatestage by the plaintiffs by itself would not establish theirreadiness and willingness to perform their part of the contractwithin the meaning of Section 16(c) of the Specific ReliefAct…”

B48. It is, therefore, patently clear that the Respondent Plaintiffhas failed to prove his readiness to perform his part of contract from thedate of execution of the agreement till date of decree, which is a conditionprecedent for grant of relief of specific performance. This Court findsthat the Respondent Plaintiff was not entitled to the relief of specificperformance.C

49. The Respondent Plaintiff may have been willing to performhis part of contract. It however appears that he was not ready withfunds. He was possibly trying to buy time to discharge his part of contract.

50. In Bhavyanath v. K.V. Balan[21] cited by Mr. Raju to contendDthat the Respondent Plaintiff was entitled to relief of specific performanceand the courts had rightly granted such relief, the Plaintiff had filed thesuit for specific performance three days after the last day for executionof the sale deed. In this case however, the Respondent Plaintiff waitedfor nearly 3 years and filed the suit for specific performance just beforeexpiry of the limitation period. Furthermore, in Bhavyanath v. K.V. BalanE(supra) the Plaintiff had adduced cogent evidence to prove his readinessand willingness to discharge his part of the contract and to prove that hehad sufficient funds to discharge his obligation. No such evidence hasbeen adduced by the Respondent Plaintiff in this case either to show hisreadiness or to prove that sufficient funds were available with him toFenable 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 opinionthat the Respondent Plaintiff was not entitled to the relief of specificperformance. The Trial Court and the High Court erred both in law andGon facts in granting such relief.

52. The appeal is accordingly allowed. The impugned judgmentof the High Court and the judgment and decree of Trial court areaccordingly set aside. The Appellants shall return the earnest money to

the Respondent Plaintiff, within 4 weeks from today with interest at therate of 7% per annum from the date of deposit of the same, till the dateof refund. It will also be open to the Respondent Plaintiff to withdrawthe deposit if any of the balance consideration in Court. Parties to beartheir own costs.

Divya Pandey

Appeal allowed.

(Assisted by : Deepak Panwar, LCRA)

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