Specific Performance of Sale Agreement: Supreme Court Restores Lower Court Decree

The case of R. Lakshmikantham vs. Devaraji revolved around the enforcement of a sale agreement and whether the buyer was entitled to specific performance. The Supreme Court had to determine whether the High Court was correct in reversing the concurrent findings of the trial court and the first appellate court, which had ruled in favor of the appellant.

The dispute arose from a sale agreement dated 22.09.2002, in which the respondent (defendant) agreed to sell the suit property for Rs.3,65,000. The appellant (plaintiff) paid an advance of Rs.5,000 and later an additional Rs.60,000. The contract stipulated that the balance had to be paid within three months. However, the seller failed to redeem the mortgage on the property, leading to delays. The plaintiff, despite repeated attempts, could not get the sale deed executed, resulting in the filing of a suit for specific performance in 2005.

Arguments of the Petitioner

The appellant, R. Lakshmikantham, contended:

“The delay in executing the sale deed was caused by the respondent’s failure to clear the mortgage, not by any fault on the appellant’s part.”

The petitioners further argued:

The agreement clearly stipulated that the seller had to obtain the title documents from the mortgagee before the balance payment was due.
Repeated notices and legal reminders were sent, but the seller failed to comply.
The plaintiff was always ready and willing to perform his part of the contract, as demonstrated by the deposit of the balance amount in court.

Arguments of the Respondent

The respondent, contesting the claim, argued:

“The sale agreement stipulated that the balance amount had to be paid within three months, and since the plaintiff failed to do so, specific performance cannot be granted.”

The respondent further contended:

The notices sent by the plaintiff were not properly served and hence could not be considered as proof of readiness and willingness.
The suit was filed belatedly, which indicated that the plaintiff was not serious about enforcing the contract.
The value of the property had increased significantly, making the contract unfairly burdensome on the seller.

Supreme Court’s Verdict

The Supreme Court, with Justices R. F. Nariman and Surya Kant presiding, ruled in favor of the appellant, restoring the lower court’s decree for specific performance. The Court observed:

“Clause 3 of the agreement must be read with Clauses 5 and 8, which clearly indicate that the three-month period was not of the essence. The seller was required to first redeem the mortgage before the balance payment could be made.”

The Court ruled:

The seller was responsible for clearing the mortgage before transferring the title, and his failure to do so justified the delay.
The registered notices sent to the seller were properly addressed and served, establishing the plaintiff’s continuous willingness to perform the contract.
The increase in property value was not a valid ground to deny specific performance.
The High Court erred in interfering with the concurrent findings of the lower courts.

Key Takeaways from the Judgment

Specific performance can be enforced even if there is a delay, provided the delay is due to the seller’s fault.
Registered legal notices serve as valid proof of the buyer’s readiness and willingness to perform.
Property value appreciation is not a valid reason to deny enforcement of a sale agreement.
High Courts should not interfere with well-reasoned concurrent findings unless there is a manifest error.

This ruling reinforces the principle that sellers cannot evade contractual obligations due to price appreciation or procedural delays caused by their own inaction.

Petitioner Name: R. Lakshmikantham.
Respondent Name: Devaraji.
Judgment By: Justice R. F. Nariman, Justice Surya Kant.
Place Of Incident: Tamil Nadu.
Judgment Date: 10-07-2019.

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