1. Agreement for sale of shop — Suit for specific performance — Dispute over plaintiff's readiness and willingness. (Para 3 )
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2018 Supreme(SC) 974
SUPREME COURT OF INDIA
R. BANUMATHI, INDIRA BANERJEE, JJ.
VIJAY KUMAR & ORS. – Appellant(s)
VERSUS
OM PARKASH – Respondent(s)
CIVIL APPEAL No(s). 10191 OF 2018 (Arising out of SLP(C)No.3768 of 2016)
Decided On : 03-10-2018
For a decree of specific performance, the plaintiff must establish continuous readiness and willingness to perform the contract, including providing documentary evidence of the financial capacity to pay the balance sale consideration.
Headnote:(A) Specific Performance - Readiness and Willingness - To obtain a decree for specific performance, the plaintiff must prove readiness and willingness to perform their part of the contract throughout and establish the same through evidence - Capacity to pay the balance sale consideration must be demonstrated and proved by the plaintiff. (Para 7)
(B) Specific Performance - Discretionary Relief - The relief for specific performance is purely discretionary - Courts are required to examine whether the plaintiff was actually able to show the capacity to pay the balance money before granting such relief. (Para 8)
Facts of the case:
An agreement for sale of a shop was entered into for a total sale consideration of Rs. 26,00,000, of which Rs. 4,00,000 was paid as earnest money. The remaining amount of Rs. 22,00,000 was to be paid on the date fixed for the execution and registration of the sale deed. Following the failure to execute the sale deed, a suit for specific performance was filed. The Trial Court dismissed the suit, but the First Appellate Court and High Court subsequently granted the decree for specific performance.
Findings of Court:
The plaintiff failed to provide any documentary evidence, such as account books, passbooks, or statements of accounts, to establish the capacity to pay the balance sale consideration. Mere assertions of borrowing money from unnamed friends without supporting evidence are insufficient to prove readiness and willingness.
Issues: Whether the plaintiff had sufficiently established readiness and willingness to perform the contract to warrant a decree of specific performance.
Ratio Decidendi: The court ruled that the burden is on the plaintiff to prove readiness and willingness throughout the contract's duration. Since the plaintiff failed to demonstrate financial capacity via documentary evidence, the discretionary relief of specific performance cannot be granted. The judgment of the First Appellate Court and High Court was set aside, and the Trial Court's decision was restored, while ordering the refund of earnest money with interest.
Result: Appeal allowed.
Legal Category Hierarchy
Table of Contents
2. Plaintiff claimed readiness and willingness; defendant contended plaintiff not ready and willing. (Para 3 , 6 )
3. Plaintiff failed to prove capacity to pay balance consideration; no documentary evidence produced. (Para 7 , 8 )
4. To obtain specific performance, plaintiff must prove readiness and willingness throughout and establish capacity to pay. (Para 7 , 8 )
5. Appeal allowed; decree set aside; earnest money refunded with interest. (Para 9 , 10 )
6. What must a plaintiff prove to obtain a decree for specific performance of an agreement for sale?
The plaintiff must prove readiness and willingness to perform throughout the contract, and establish capacity to pay the balance consideration. (Para 7 )
7. What evidence is required to demonstrate capacity to pay the balance sale consideration?
The plaintiff should produce bank statements, account books, or other documents showing availability of funds at the relevant time. (Para 7 )
8. Is the relief of specific performance discretionary?
Yes, relief for specific performance is purely discretionary and depends on the plaintiff's conduct and proof of readiness. (Para 8 )
9. What remedy is available if the plaintiff fails to prove readiness and willingness?
The plaintiff is entitled to refund of earnest money paid, with interest, but not specific performance. (Para 9 )
JUDGMENT
BANUMATHI, J.
(1) Leave granted.
(2) This appeal arises out of judgment and order dated 19th December, 2015 passed by the High Court of Punjab and Haryana at Chandigarh in R.S.A. NO.6184 of 2015 in and by which the High Court has affirmed the judgment of the First Appellate Court thereby granting decree for specific performance in favour of the respondent-plaintiff.
(3) The facts of the case in a nutshell are as follows. The appellants-defendant and the respondent-plaintiff had entered into an agreement for sale on 9th November, 2007 in respect of a shop for a total sale consideration of Rs.26,00,000 (Rupees twenty six lakhs). Rs.4,00,000/- (Rupees four lakhs) was paid by the respondent-plaintiff to the appellants-defendant as earnest money and the remaining amount of Rs.22,00,000/- (Rupees Twenty Two Lakhs) was to be paid on 31st March, 2008 that is the date fixed for executing the registration of the sale deed. Admittedly, both the parties went to the concerned Sub-Registrar’s Office on 31st March, 2008; but the sale deed was not executed. The respondent-plaintiff filed a suit on 29th April, 2008 for specific performance. The appellants-defendant contested the suit contending that the respondent-plaintiff was not ready and willing to perform his part of the contract. Upon consideration of oral and documentary evidence, the Trial Court dismissed the suit for specific performance filed by the respondent-plaintiff holding that the respondent has failed to prove his readiness and willingness to perform the contract.
(4) In appeal, preferred by the respondent-plaintiff, the First Appellate Court set aside the judgment of the Trial Court and allowed the first appeal thereby granting specific performance in favour of the respondent-plaintiff. The judgment of the First Appellate Court was affirmed by the High Court, as aforesaid in para (1).
(5) We have heard Mr. Kaushal Yadav, learned counsel appearing for the appellants-defendant and Mr. Sumit Bansal, learned counsel appearing for the respondent-plaintiff and also perused the impugned judgment and the evidence/materials on record.
(6) Learned counsel for the respondent-plaintiff has submitted that the respondent’s readiness and willingness has been accepted by the two courts below and the respondent has actually deposited the balance amount of Rs.22,00,000/- (Rupees Twenty Two Lakhs) in 2015 after the judgment of the First Appellate Court.
(7) In order to obtain a decree for specific performance, the plaintiff has to prove his readiness and willingness to perform his part of the contract and the readiness and willingness has to be shown through out and has to be established by the plaintiff. In the case in hand, though the respondent-plaintiff has filed the suit for specific performance on 29th April, 2008, the respondent-plaintiff has not shown his capacity to pay the balance sale consideration of Rs.22,00,000 (Rupees Twenty Two Lakhs). In his evidence, the respondent-plaintiff has stated that he has borrowed the amount from his friends and kept the money to pay the balance sale consideration. As rightly pointed out by the Trial Court, the respondent-plaintiff could not produce any document to show that he had the amount of Rs.22,00,000 (Rupees Twenty Two Lakhs) with him on the relevant date; nor was he able to name the friends from whom he raised money or was able to raise the money. Further more, as rightly pointed out by the Trial Court, the respondent-plaintiff could have placed on record his Accounts Book, Pass Book or the Statement of Accounts or any other negotiable instrument to establish that he had the money with him at the relevant point of time to perform his part of the contract. We are, therefore, in agreement with the view taken by the Trial Court that the respondent-plaintiff has not been able to prove his readiness and willingness on his part.
(8) The relief for specific performance is purely discretionary. Though the respondent-plaintiff has alleged that he wa
