Specific Performance of Contract for Sale of Immovable Property: Legal Insights from Daivasigamani vs. Sambandan Case

The case of P. Daivasigamani vs. S. Sambandan involves a dispute over the specific performance of a contract for the sale of immovable property. The legal questions at the heart of the dispute pertain to the enforceability of a sale agreement, the readiness and willingness of the plaintiff to perform their part of the contract, and the conditions under which specific performance can be granted. This case, decided by the Supreme Court, explores the application of the Specific Relief Act, 1963, particularly regarding the requirement for readiness and willingness on the part of the party seeking specific performance.

The appellant, P. Daivasigamani, was the owner of a piece of land in Ayanambakkam, District Ambattur, and had entered into an agreement to sell the land to the respondent, S. Sambandan, in October 1989. The sale price was agreed to be Rs. 6,50,000, and the respondent paid Rs. 50,000 as earnest money. The agreement stipulated that the sale should be completed within six months. However, the appellant did not fulfill his part of the agreement, prompting the respondent to file a suit for specific performance.

In the trial court, the respondent sought not only specific performance of the agreement but also a refund of the earnest money, along with interest and compensation. The trial court ruled partly in favor of the respondent, granting a refund of the earnest money with interest, but dismissed the claim for specific performance, concluding that the respondent had not proved his readiness and willingness to perform his part of the contract.

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On appeal, the High Court overturned the trial court’s decision, ruling that the respondent had indeed shown his readiness and willingness to perform the contract, and granted specific performance. The appellant, dissatisfied with the High Court’s judgment, appealed to the Supreme Court.

The primary issue before the Supreme Court was whether the respondent had met the legal requirements for claiming specific performance, specifically regarding the readiness and willingness to perform the contract. The court discussed the essential elements of Section 16(c) of the Specific Relief Act, which mandates that a party seeking specific performance must prove that they have been ready and willing to perform their part of the contract.

The Supreme Court emphasized that readiness and willingness are two separate elements. Readiness refers to the capacity of the plaintiff to perform the contract, including the financial ability to pay the balance sale consideration, while willingness refers to the intention to perform the contract. The Court observed that the respondent had made repeated attempts to contact the appellant, including sending notices and publishing public notices, all of which demonstrated his willingness to fulfill his contractual obligations. Additionally, the court held that the requirement to deposit the balance sale consideration in court at the time of filing the suit was not mandatory, and the respondent had sufficiently shown his readiness to perform the contract through other means.

The appellant raised several objections, including the claim that the respondent had not demonstrated his financial ability to pay the remaining sale consideration and that the suit was barred by the law of limitation. However, the Court rejected these arguments, noting that the suit had been filed within the prescribed period under the Limitation Act, as the period began when the respondent was notified that the appellant had refused to perform the contract. The Court further held that mere delay in filing the suit was not a sufficient reason to deny the relief of specific performance, especially as the suit was filed within the statutory time limit.

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The Court also dealt with the issue of the discretionary nature of the relief of specific performance. While specific performance is discretionary, the Court ruled that the respondent had complied with all the requirements of the law, and there was no valid reason to deny the relief. The Court also noted that the appellant had failed to perform his obligations under the contract, despite being repeatedly called upon to do so by the respondent.

In a final twist, the Court considered the rise in property prices since the execution of the agreement in 1989 and decided that the interest of justice would be best served if the respondent paid an additional amount of Rs. 1 crore as part of the sale consideration. The appellant was directed to execute the sale deed upon receipt of this amount, which the respondent was to deposit within eight weeks.

The judgment in this case is significant for its clarification of the legal standards for specific performance under the Specific Relief Act, especially regarding the need for proof of readiness and willingness. It also highlights the Court’s approach to time limits in contracts for immovable property, emphasizing that time is not always considered the essence of the contract, particularly when specific performance is sought. The Court’s decision reflects a nuanced understanding of the equitable nature of the relief of specific performance, balancing legal principles with practical realities in property transactions.

Petitioner Name: P. Daivasigamani.
Respondent Name: S. Sambandan.
Judgment By: Justice Bela M. Trivedi, Justice Sanjiv Khanna.
Place Of Incident: Ayanambakkam, District Ambattur, Tamil Nadu.
Judgment Date: 11-10-2022.

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