Shenbagam vs. KK Rathinavel: Supreme Court Denies Specific Performance in Land Dispute

The case of Shenbagam & Ors. vs. KK Rathinavel revolves around a dispute concerning the specific performance of a land sale agreement. The Supreme Court set aside the judgment of the Madras High Court, ruling that the plaintiff, KK Rathinavel, was not entitled to specific performance as he failed to demonstrate readiness and willingness to fulfill the contract. Instead, the Court ordered a refund of the advance amount with interest.

Background of the Case

The appellants, Shenbagam and others, owned a property located in Coimbatore. On February 7, 1990, they entered into an agreement to sell their land to the respondent, KK Rathinavel, for ₹1,25,000. The respondent initially paid ₹25,000 as an advance and later an additional ₹10,000. The agreement stipulated that the balance had to be paid within six months, after which the sale deed would be executed.

However, the appellants rescinded the contract on December 19, 1990, alleging that the respondent failed to make the payment within the stipulated period. In response, the respondent sent a notice on December 26, 1990, demanding execution of the sale deed free from encumbrances. The appellants had a mortgage of ₹6,000 on the property, which they claimed the respondent had agreed to discharge.

Subsequently, in 1991, the respondent filed a suit seeking a permanent injunction to restrain the appellants from alienating the property. In 1993, he filed another suit for specific performance, alternatively seeking a refund of the advance amount with interest.

Petitioner’s Arguments

The appellants, represented by Senior Counsel V Mohana, put forth the following arguments:

The respondent failed to demonstrate readiness and willingness to pay the balance consideration within the six-month period.
The trial court did not frame an issue on whether the respondent was ready and willing to perform his obligations.
The respondent did not take any steps to complete the sale until a legal notice was issued.
The mortgage clearance was not a condition precedent for the transaction; rather, the balance amount was required to be paid first.
Filing a suit for specific performance three years after the agreement indicates the respondent’s lack of commitment.

Respondent’s Arguments

KK Rathinavel, represented by Siddharth Naidu, countered with the following arguments:

The appellants had to clear the mortgage before executing the sale deed, which was why the balance amount was not paid.
The respondent was financially capable of making the payment and had already deposited the balance amount in court.
The conduct of the appellants showed a reluctance to honor the agreement.
The delay in filing the specific performance suit was justified as the appellants delayed clearing the mortgage.

Key Observations of the Supreme Court

A bench comprising Dr. Dhananjaya Y Chandrachud and AS Bopanna made the following observations:

The trial court failed to frame an issue regarding the respondent’s readiness and willingness to perform the contract.
Merely having financial resources does not prove willingness; the respondent did not communicate his readiness at the required time.
The delay in filing the suit for specific performance weakened the respondent’s case.
The respondent’s withdrawal of the balance deposit in 2001 further indicated a lack of serious intent.

Final Judgment

The Supreme Court ruled that specific performance could not be granted due to the respondent’s failure to establish continuous readiness and willingness. Instead, the Court ordered:

The appellants to refund ₹35,000 to the respondent.
Interest at 6% per annum to be paid from the date of filing the suit.
The judgment of the Madras High Court was set aside.

Implications of the Judgment

The ruling clarifies key principles in specific performance cases:

Readiness and willingness are essential: Plaintiffs must demonstrate continuous intent and capability.
Delays can be detrimental: Filing a suit years after an agreement weakens a claim for specific performance.
Specific performance is discretionary: Courts consider fairness and practicality before enforcing contracts.

This judgment reinforces that specific performance is not an automatic remedy and must be granted only when all conditions are met.

Petitioner Name: Shenbagam & Ors..
Respondent Name: KK Rathinavel.
Judgment By: Justice Dhananjaya Y Chandrachud, Justice AS Bopanna.
Place Of Incident: Coimbatore, Tamil Nadu.
Judgment Date: 20-01-2022.

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