Specific Performance and Readiness in Property Disputes: Supreme Court’s Key Ruling

The Supreme Court of India in the case of B. Vijaya Bharathi vs. P. Savitri & Ors. addressed an important legal issue concerning the enforcement of an agreement to sell and the principles of readiness and willingness in specific performance suits under the Specific Relief Act, 1963. The judgment clarifies the obligations of a party seeking specific performance and the impact of delay in enforcing such agreements.

The case originated from an agreement to sell executed in 1992, which led to a legal battle over the plaintiff’s entitlement to specific performance. The Supreme Court upheld the High Court’s ruling, stating that the plaintiff had failed to demonstrate continuous readiness and willingness, which is a mandatory requirement under Section 16(c) of the Specific Relief Act.

Background of the Case

The dispute arose when the appellant, B. Vijaya Bharathi, entered into an agreement to purchase a property from P. Savitri (Respondent No.1) on 21st February 1992. The agreed price was Rs. 1,80,000, out of which Rs. 1,30,000 was paid as an advance. The balance of Rs. 50,000 was to be paid upon receiving an intimation from the vendor.

The agreement stipulated that the vendor would obtain necessary permissions, including:

Society’s permission for transfer of membership.
Clearances from tax and land ceiling authorities.
Other statutory approvals for executing the sale deed.

On 13th March 1992, the vendor appeared before the registering authority to execute a General Power of Attorney in favor of the plaintiff’s husband. However, she withdrew from the process and left the sub-registrar’s office without completing the registration.

Subsequently, on 12th May 1992, the vendor sold the property to Defendant No.2 for Rs. 1,20,000. Later, Defendant No.2 resold it to Defendant No.3 on 5th July 1993 for Rs. 1,95,000.

The plaintiff issued a legal notice on 18th February 1994, offering to pay the balance Rs. 50,000 and demanded execution of the sale deed. Since the vendor refused, a suit for specific performance was filed on 13th April 1994.

Arguments by the Petitioner

The appellant, B. Vijaya Bharathi, contended:

The agreement to sell was prior to both subsequent registered sale deeds, making the later transactions void.
Defendants 2 and 3 were not bona fide purchasers as they did not obtain an encumbrance certificate before purchasing the property.
The delay in filing the suit was justified as she was waiting for the vendor to obtain necessary clearances.
The trial court rightly decreed the suit for specific performance, recognizing the plaintiff’s legal entitlement to enforce the contract.

Arguments by the Respondents

The respondents, including P. Savitri and subsequent purchasers, argued:

The plaintiff failed to act in a timely manner and did not demonstrate continuous readiness and willingness, as required under Section 16(c) of the Specific Relief Act.
The agreement stood repudiated when the vendor refused to execute the power of attorney on 13th March 1992, and the plaintiff’s inaction for nearly two years indicated a lack of commitment to the transaction.
The plaintiff did not amend the suit to seek cancellation of the subsequent sale deeds, making the relief of specific performance legally untenable.
The High Court was correct in dismissing the suit, as the delay and inaction on the part of the plaintiff suggested that she had waived her rights.

Supreme Court’s Observations

The Supreme Court bench, comprising Justice R.F. Nariman and Justice Sanjay Kishan Kaul, carefully analyzed the facts and made the following key observations:

“One crucial fact that stares us in the face is that on 13.03.1992, the first defendant ran away from the Registering Authority making it clear that she did not want to act in furtherance of the Agreement. The High Court was right in stating that no prudent person would stay quiet for a period of one year and eleven months after such an unequivocal repudiation if they were really interested in going ahead with the sale transaction.”

The Court also emphasized the importance of proving continuous readiness and willingness:

“The only inference, therefore, from this is that the plaintiff cannot possibly be said to be ready and willing throughout to perform their part of the agreement.”

The judgment also referenced the three-judge bench ruling in Ram Awadh (dead) by Lrs. vs. Achhaibar Dubey (2000) 2 SCC 428, which held that subsequent purchasers could raise objections regarding the plaintiff’s lack of readiness and willingness.

Legal Principles Affirmed

The Supreme Court reinforced several key legal principles:

Readiness and Willingness Under Section 16(c): A party seeking specific performance must prove continuous readiness and willingness to fulfill contractual obligations.
Impact of Delay: Mere delay is not always fatal, but when coupled with inaction after an agreement is repudiated, it can lead to dismissal of the suit.
Burden on Plaintiff: If the vendor sells the property to a third party, the original buyer must not only seek specific performance but also challenge and seek cancellation of subsequent sales.
Protection of Bona Fide Purchasers: If the plaintiff fails to act diligently, subsequent buyers who purchase in good faith may be protected.

Conclusion

The Supreme Court dismissed the appeal and upheld the High Court’s judgment, reiterating that the plaintiff’s failure to act promptly and prove continuous readiness and willingness disqualified her from obtaining specific performance.

This ruling underscores the importance of acting diligently in property transactions and ensures that courts will not enforce specific performance unless the plaintiff has demonstrated an unbroken commitment to fulfilling their contractual obligations.

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