Supreme Court Denies Specific Performance in Property Sale Dispute, Orders Compensation

The case of P. Ravindranath & Anr. v. Sasikala & Ors. revolves around a long-standing property dispute related to an agreement to sell entered into in 1981. The Supreme Court, in its judgment dated July 15, 2024, ruled against specific performance of the contract but directed the appellant to compensate the respondent with ₹30 lakhs.

The case highlights key legal principles concerning the enforcement of agreements to sell, the necessity of proving readiness and willingness under Section 16(c) of the Specific Relief Act, and the equitable considerations in long-pending property disputes.

Background of the Case

The dispute arose from an agreement to sell dated May 24, 1981, between the original vendors (Muni Venkata Reddy and his four sons) and the vendees (Sasikala and K. Satyanarayana). The agreement pertained to a property in Kodihali Village, Bangalore, measuring 5,280 sq. ft., with a sale consideration of ₹29,000.

The agreement specified:

An advance of ₹12,000 was paid at the time of execution.
The balance amount was to be paid at the time of registration.
The stipulated period for completion was three months, but execution was subject to government restrictions on land registrations being lifted.

After three months, when the plaintiffs did not come forward to execute the sale deed, the vendor sent a notice on September 23, 1981, extending the deadline by one more week. Another legal notice followed on November 18, 1981, stating that the agreement had been terminated due to non-payment of the balance amount.

In response, the plaintiffs contended:

They had also paid an additional ₹2,000 (totaling ₹14,000), though no receipt was issued.
The agreement was still valid as the government restrictions had not been lifted.
They were always ready and willing to complete the sale.

However, the vendors proceeded to sell the property to other parties in 1983. The plaintiffs then filed a suit for specific performance, which was decreed by the Trial Court in 2002 and upheld by the Karnataka High Court in 2015.

Arguments by the Appellant

The appellant, who had purchased the property in 1983, argued:

The plaintiffs had failed to prove that they were ready and willing to perform their obligations under the agreement.
No documentary evidence was provided to support the claim of government restrictions on registrations.
The suit was filed after a long delay, indicating a lack of interest in enforcing the contract.
The appellant was a bona fide purchaser without notice of the prior agreement.
It would be inequitable to enforce a sale after 43 years.

Arguments by the Respondent

The respondents contended:

The agreement was still enforceable since the restrictions on registration were a valid reason for the delay.
The plaintiffs had continuously expressed their readiness and willingness to perform their part of the contract.
The subsequent purchasers were not bona fide and had knowledge of the earlier agreement.

Supreme Court’s Observations

The Supreme Court considered the following key issues:

1. Readiness and Willingness

The Court emphasized the importance of proving readiness and willingness under Section 16(c) of the Specific Relief Act, stating:

“The plaintiffs must stand on their own legs to establish that they have made out a case for the grant of relief of specific performance.”

It was found that the plaintiffs had not:

Deposited the balance amount or made any serious effort to complete the transaction.
Produced evidence of the alleged government restrictions.
Sent any further legal notices between 1981 and 1983 to demand execution of the sale deed.

2. Delay in Filing the Suit

The Court noted that:

The plaintiffs filed the suit only in 1983, after the property had already been sold to another party.
There was no explanation for the delay in taking legal action.

3. Bona Fide Purchaser Protection

The Court recognized that the appellant had purchased the property in 1983, had been in possession for over 40 years, and had no knowledge of the prior agreement.

4. Equitable Relief

The Court ruled that granting specific performance after 43 years would be inequitable, stating:

“The balance of convenience lies in compensating the plaintiffs rather than displacing settled ownership.”

Supreme Court’s Final Verdict

The Supreme Court held:

The decree for specific performance was set aside.
The suit was dismissed.
However, to balance equities, the appellant was directed to pay ₹30 lakhs to the plaintiffs as compensation.
This amount was to be paid within three months.

Conclusion

The judgment in P. Ravindranath & Anr. v. Sasikala & Ors. reaffirms the principle that specific performance is a discretionary relief and cannot be granted in cases where there is unreasonable delay and lack of evidence of readiness and willingness. It also underscores the importance of balancing equities, ensuring that long-standing ownership rights are not disturbed without compelling reasons.

Petitioner Name: P. Ravindranath & Anr..
Respondent Name: Sasikala & Ors..
Judgment By: Justice Vikram Nath, Justice Prashant Kumar Mishra.
Place Of Incident: Bangalore, Karnataka.
Judgment Date: 14-07-2024.

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