Sub-title: The Supreme Court has held that a purchaser seeking specific performance must establish continuous readiness and willingness throughout the contractual period. The Court observed that financial capacity must be proved at the relevant time and that unexplained delay in approaching the court may disentitle a party to equitable relief.
Supreme Court Dismisses Appeal
The Supreme Court specific performance ruling dismissed Civil Appeal No. 2187 of 2011. The Court affirmed the Karnataka High Court’s decision refusing specific performance of an agreement to sell. It found that the plaintiff failed to establish continuous readiness and willingness to perform contractual obligations under Section 16(c) of the Specific Relief Act, 1963.
A Bench comprising Justice Prashant Kumar Mishra and Justice N.V. Anjaria delivered the judgment on June 23, 2026 in Mohammed Khaleel (D) Through LRs & Ors. v. Jayamma. The Court held that the appellants did not demonstrate financial readiness during the relevant period. It also held that they did not approach the court with promptitude. As a result, they were not entitled to the discretionary equitable relief of specific performance.
Background of the Dispute
The dispute arose from an agreement to sell dated December 20, 1990. Under the agreement, Jayamma agreed to sell a vacant site measuring 100 feet by 78 feet to Mohammed Khaleel for Rs. 3,00,000. The plaintiff paid Rs. 25,000 as earnest money. The balance of Rs. 2,75,000 was payable within four months at the time of registration of the sale deed.
The respondent handed over original title documents. These included the original will deed, settlement deed, katha extract, tax receipts, encumbrance certificate, an application to the Revenue Officer, a photocopy of a 1961 sale deed, and a plan dividing the property into eight shares.
The plaintiff claimed that the respondent had also agreed that her siblings would execute an interim agreement for formation of an approach road. The respondent denied this and maintained that an approach road already existed.
The plaintiff issued a notice on April 15, 1991 seeking performance of the agreement. The notice was not served because of an incorrect address. On April 26, 1991, the respondent rescinded the agreement and forfeited the earnest money. She alleged that the plaintiff had failed to obtain permission under the Urban Land (Ceiling and Regulation) Act, 1976 (ULCRA) within the stipulated period.
The plaintiff replied on April 30, 1991. He stated that no approach road had been formed and that ULCRA permission had not been obtained. He expressed his intention to seek specific performance.
Subsequent Notices and Suit
On July 30, 1992, the plaintiff sent another notice. He alleged forcible dispossession and reiterated his willingness to complete the transaction after obtaining ULCRA permission. The respondent denied liability and asserted that she did not own adjoining land for constructing a road. She argued that the plaintiff was introducing additional conditions not contained in the agreement.
The plaintiff filed O.S. No. 432 of 1993 before the Principal Civil Judge (Senior Division), Mysore. He sought specific performance of the agreement dated December 20, 1990 and possession of the property. In the alternative, he sought compensation of Rs. 3,00,000 for breach of contract.
One of the plaintiff’s legal representatives, K.M. Mohammed Hayath (PW-1), gave evidence. He relied on 29 documents, including correspondence between the parties and four Fixed Deposit Receipts (FDRs) of Rs. 70,000 each. The respondent did not enter the witness box or lead oral evidence.
On January 31, 2002, the Trial Court decreed the suit. It held that possession had been delivered to the plaintiff, time was not of the essence of the contract, the plaintiff was ready and willing to perform, and the respondent had rescinded the agreement without justification.
However, the Karnataka High Court reversed the decree on December 9, 2009 in RFA No. 418 of 2003. It held that the plaintiff failed to plead and prove readiness and willingness. It also held that he had not complied with ULCRA requirements and had delayed filing the suit for two years and nine months.
Arguments Before the Supreme Court
Appellants’ Submissions
Counsel for the appellants argued that the High Court had wrongly concluded that the plaintiff lacked readiness and willingness. The appellants relied on four FDRs totaling Rs. 2,80,000. They argued that this amount was sufficient to meet the balance consideration of Rs. 2,75,000.
They also contended that insisting on demarcation and proper measurement of the property could not be treated as unwillingness. According to them, it was necessary to ensure a valid conveyance.
The appellants further argued that the obligation to obtain ULCRA permission primarily rested with the respondent as transferor of the property. They submitted that the plaintiff had expressed willingness to cooperate by signing all necessary documents.
They also challenged the High Court’s reliance on the two-year-and-nine-month delay. Since the suit was filed within the limitation period, they argued that the delay should not defeat the claim.
Respondent’s Submissions
The respondent argued that the plaintiff failed to prove continuous readiness and willingness. She pointed out that the FDRs were created nearly nine years after the agreement. Therefore, they could not establish financial readiness during the relevant period.
The respondent also submitted that ULCRA permission required participation by both parties. She argued that the plaintiff had failed to discharge his obligations. According to her, the insistence on an approach road introduced fresh conditions not contemplated by the agreement.
Supreme Court’s Observations
Justice Prashant Kumar Mishra, writing for the Bench, reiterated that Section 16(c) of the Specific Relief Act required a plaintiff to plead and prove continuous readiness and willingness.
The Court explained that readiness refers to financial capacity, while willingness is reflected in the conduct and intention of the party seeking relief. Both elements must coexist throughout the contractual period.
The Bench relied on several precedents, including N.P. Thirugnanam (Dead) by LRs. v. Dr. R. Jagan Mohan Rao & Ors., His Holiness Acharya Swami Ganesh Dassji v. Sita Ram Thapar, Umabai & Anr. v. Nilkanth Dhondiba Chavan (Dead) by LRs. & Anr., Man Kaur (Dead) by LRs. v. Hartar Singh Sangha, Rajesh Kumar v. Anand Kumar & Ors., K.S. Vidyanadam v. Vairavan, Chand Rani v. Kamal Rani, Azhar Sultana v. B. Rajamani, and Atma Ram v. Charanjit Singh.
Financial Readiness and ULCRA Compliance
The Court examined the four FDRs totaling Rs. 2,80,000. It found that the deposits were created between October 1999 and August 2001, several years after the suit was filed in December 1993.
The Bench held that these deposits did not establish financial readiness during the relevant contractual period. Although the plaintiff did not need to deposit the sale consideration in court, he had to produce reliable evidence showing availability of funds from the date of the agreement until filing of the suit.
The Court found no such evidence on record.
Regarding ULCRA permission, the Court held that both parties were required to participate in obtaining the statutory clearance. The testimony of PW-1 showed that the plaintiff had not furnished the necessary affidavit and forms.
Delay in Filing the Suit
The Court emphasized that filing a suit within the limitation period does not automatically entitle a party to specific performance. A plaintiff seeking equitable relief must act with diligence and promptitude.
The respondent had categorically refused performance through the notice dated April 26, 1991. Despite this, the plaintiff filed the suit only on December 20, 1993. The Court held that the delay of two years and nine months reflected a lack of continuous readiness and willingness.
Final Decision
Holding that the appellants failed to satisfy the statutory requirements of readiness and willingness under Section 16(c) of the Specific Relief Act, 1963, the Supreme Court concluded that the case was not fit for grant of specific performance.
The Supreme Court specific performance decision therefore dismissed Civil Appeal No. 2187 of 2011 and affirmed the Karnataka High Court’s judgment dated December 9, 2009, which had set aside the Trial Court’s decree for specific performance.
