Supreme Court Denies Specific Performance: Readiness and Willingness Key in Property Sale Dispute

The case of U.N. Krishnamurthy (Since Deceased) Through LRs vs. A.M. Krishnamurthy revolves around a dispute over the specific performance of an alleged agreement to sell immovable property. The Supreme Court ruled against the plaintiff, holding that he failed to prove his continuous readiness and willingness to perform his part of the contract, which is a mandatory requirement under Section 16(c) of the Specific Relief Act, 1963.

The ruling highlights the importance of strict compliance with legal requirements in property transactions, particularly when seeking specific performance. The case sets a significant precedent in disputes related to real estate agreements and contractual obligations.

Background of the Case

The dispute arose over an alleged agreement between the deceased appellant, U.N. Krishnamurthy, and the respondent, A.M. Krishnamurthy, regarding the sale of a property in Tamil Nadu. The respondent claimed that the appellant had agreed to sell the property for Rs. 15,10,000, out of which an advance of Rs. 10,001 had been paid. The sale was to be completed by March 15, 2003.

However, the appellant denied entering into any such agreement. When the sale did not materialize, the respondent filed a suit for specific performance in 2005, nearly three years after the alleged agreement. The trial court ruled in favor of the respondent, and the High Court upheld the decision. The appellant then approached the Supreme Court.

Key Legal Issues

Did the plaintiff (respondent) establish a valid agreement for sale?
Was the plaintiff continuously ready and willing to perform his part of the contract?
Was the delay in filing the suit justified, and does it impact the grant of specific performance?
Should the court grant specific performance given the substantial increase in property prices?

Arguments Presented

Appellant’s (U.N. Krishnamurthy’s LRs) Arguments:

The alleged agreement was not genuine and had no legal standing.
The plaintiff failed to provide any evidence of financial capability to pay the remaining balance.
The delay of three years in filing the suit indicated that the plaintiff was not ready or willing to perform his part of the contract.
The price of the property had significantly increased, making the enforcement of the alleged agreement unjust.

Respondent’s (A.M. Krishnamurthy’s) Arguments:

The agreement was valid, and an advance payment was made.
The plaintiff had continuously approached the defendant to execute the sale deed but was refused.
The plaintiff had deposited the balance amount in court, proving readiness and willingness.
The courts should enforce the agreement to uphold the principle of contractual obligations.

Supreme Court’s Observations and Ruling

The Supreme Court ruled in favor of the appellant, setting aside the High Court and trial court decisions. Key observations include:

Specific performance is a discretionary remedy, and courts must ensure fairness and equity before granting it.
The plaintiff failed to prove continuous readiness and willingness to perform his obligations.
The significant delay in filing the suit raised doubts about the plaintiff’s intentions.
The increase in property prices made it inequitable to enforce the agreement after such a long period.

The Court emphasized:

“A mere statement in the plaint is not sufficient; the plaintiff must provide concrete evidence to demonstrate financial capability and genuine intent to complete the transaction.”

The Supreme Court directed that the advance amount paid by the plaintiff be refunded with interest but denied the relief of specific performance.

Key Takeaways from the Judgment

Courts will scrutinize the plaintiff’s readiness and willingness before granting specific performance.
Delays in filing suits for specific performance can be fatal to a claim.
The impact of property price appreciation is a relevant consideration.
Specific performance is not an absolute right but a discretionary relief that courts will grant only if equitable.

Impact of the Judgment

The ruling serves as a cautionary precedent for buyers seeking specific performance of real estate contracts.
It reinforces the principle that mere filing of a suit does not establish a plaintiff’s readiness and willingness.
The judgment will influence future cases where buyers delay legal action after alleged agreements.
Property sellers can rely on this judgment to defend against stale claims for specific performance.

Conclusion

The Supreme Court’s verdict in this case underscores the importance of timely legal action and financial preparedness in real estate transactions. By denying specific performance, the Court reinforced the principle that equitable considerations must be taken into account, ensuring that legal remedies are not used to take undue advantage of market fluctuations.

Petitioner Name: U.N. Krishnamurthy (Since Deceased) Through LRs.
Respondent Name: A.M. Krishnamurthy.
Judgment By: Justice Indira Banerjee, Justice Hrishikesh Roy.
Place Of Incident: Tamil Nadu.
Judgment Date: 12-07-2022.

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