1. Agreement to sell agricultural land — Unilateral termination by vendors — Subsequent sale to third parties — Suit for specific performance under Specific Relief Act. (Para 5 , 8 , 10 , 11 )
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2025 Supreme(SC) 1906
SUPREME COURT OF INDIA
J.B. PARDIWALA, R. MAHADEVAN, JJ.
K.S. Manjunath and Others – Appellants
Versus
Moorasavirappa @ Muttanna Chennappa Batil, Since Deceased by His LRs. and Others – Respondents
Civil Appeal No. 13507-13508 of 2025 [Arising Out of Special Leave Petition (C) Nos. 29405-29406 of 2017]
Decided On : 10-11-2025
Important Points
Court ruled that unilateral termination of an Agreement to Sell is impermissible unless contract is determinable, specifically enforcing original vendees' rights due to continuous readiness and notice to subsequent purchasers.
Subject
Contract Law - Specific Performance
Act Referred
CIVIL PROCEDURE CODE: O.7 R.1, O.7 R.11(d), S.9
GENERAL CLAUSES ACT: S.3(2)
LIMITATION ACT: Art.54, Art.65, S.14
SPECIFIC RELIEF ACT: S.14, S.19(b), S.27, S.31
GENERAL CLAUSES ACT: S.3(2)
LIMITATION ACT: Art.54, Art.65, S.14
SPECIFIC RELIEF ACT: S.14, S.19(b), S.27, S.31
Headnote
(A) Specific Relief Act, 1963 - Sections 16(c) and 19(b) - Contractual obligations - Notice of termination of Agreement to Sell (ATS) not valid as ATS was non-determinable - Subsequent purchasers held not to be bona fide buyers due to actual and constructive notice of prior agreement - Original vendees able to demonstrate readiness and willingness to perform their obligations under ATS. (Paras 4, 87, 89, 90)
(B) This Court examined whether the High Court erred in allowing the original vendees’ claim for specific performance without a declaration of termination’s validity - High Court affirmed that unilateral termination was impermissible and the original vendees’ willingness was demonstrated. (Paras 86, 88, 90)
Facts of the case:
Appellants claimed specific performance against respondents for an unregistered ATS dated 28.04.2000. Respondents purportedly terminated ATS citing litigation and vendor's death. Original vendees maintained readiness, while subsequent purchasers allegedly bought without equitable notice of ATS. (Paras 3, 10, 11)
Findings of Court:
ATS remains enforceable as termination was invalid; original vendees exhibited continuous readiness and willingness to perform. (Paras 54, 63, 84)
Issues: Whether ATS was determinable, whether notice of termination valid, whether subsequent purchasers acted in good faith. (Paras 4, 12, 67)
Ratio Decidendi: Court ruled that unilateral termination based on misunderstanding of obligations was not valid; bona fide purchasers must conduct due diligence and cannot avoid knowledge of earlier agreements. (Paras 18, 64, 76)
Result: Appeals dismissed; specific performance decreed in favor of original vendees with directions for execution of sale deeds. (Paras 89, 90)
(B) This Court examined whether the High Court erred in allowing the original vendees’ claim for specific performance without a declaration of termination’s validity - High Court affirmed that unilateral termination was impermissible and the original vendees’ willingness was demonstrated. (Paras 86, 88, 90)
Facts of the case:
Appellants claimed specific performance against respondents for an unregistered ATS dated 28.04.2000. Respondents purportedly terminated ATS citing litigation and vendor's death. Original vendees maintained readiness, while subsequent purchasers allegedly bought without equitable notice of ATS. (Paras 3, 10, 11)
Findings of Court:
ATS remains enforceable as termination was invalid; original vendees exhibited continuous readiness and willingness to perform. (Paras 54, 63, 84)
Issues: Whether ATS was determinable, whether notice of termination valid, whether subsequent purchasers acted in good faith. (Paras 4, 12, 67)
Ratio Decidendi: Court ruled that unilateral termination based on misunderstanding of obligations was not valid; bona fide purchasers must conduct due diligence and cannot avoid knowledge of earlier agreements. (Paras 18, 64, 76)
Result: Appeals dismissed; specific performance decreed in favor of original vendees with directions for execution of sale deeds. (Paras 89, 90)
Judgement Key Points
Key Points: - Unilateral termination of a non-determinable Agreement to Sell is impermissible and does not discharge the contract (!) (!) . - Subsequent purchasers must show they paid for value, paid in good faith, and had no notice of the prior agreement to qualify as bona fide purchasers under Section 19(b) (!) (!) . - A plaintiff must prove continuous readiness and willingness to perform essential obligations to seek specific performance under Section 16(c) (!) (!) .
What is the effect of unilateral termination of an Agreement to Sell when the agreement is not determinable in nature?
How are subsequent purchasers assessed for bona fide status when a prior Agreement to Sell exists?
What are the conditions for specific performance of an Agreement to Sell under Section 16(c) of the Specific Relief Act, 1963?
Legal Category Hierarchy
-
civil law
- property law
- contract law
- practice and procedure
Advocates appeared:
For the Petitioner(s): Dr. Aditya Sondhi, Sr. Adv. Dr. Joseph Aristotle S., Sr. Adv. Mr. Naveen Nagarjuna, Adv. Ms. Priya Aristotle, AOR Mr. Maeen Mavara M, Adv. Mr. Anubhav Kumar, Adv. Ms. B. Lekshmi, Adv.
For the Respondent(s): Ms. Supreeta Sharanagouda, AOR Mr. Sharanagouda Patil, Adv. Mr. Yash S Tiwari, Adv. Mr. Devadatt Kamat, Sr. Adv. Mr. Nishanth Patil, AOR Mr. Rohit Sharma, Adv. Ms. Bhumi Agrawal, Adv. Mr. Harsh Pandey, Adv. Mr. Awanish Gupta, Adv. Mr. Abhishek Gupta, Adv. Mr. Arijit Dey, Adv.
For the Petitioner(s): Dr. Aditya Sondhi, Sr. Adv. Dr. Joseph Aristotle S., Sr. Adv. Mr. Naveen Nagarjuna, Adv. Ms. Priya Aristotle, AOR Mr. Maeen Mavara M, Adv. Mr. Anubhav Kumar, Adv. Ms. B. Lekshmi, Adv.
For the Respondent(s): Ms. Supreeta Sharanagouda, AOR Mr. Sharanagouda Patil, Adv. Mr. Yash S Tiwari, Adv. Mr. Devadatt Kamat, Sr. Adv. Mr. Nishanth Patil, AOR Mr. Rohit Sharma, Adv. Ms. Bhumi Agrawal, Adv. Mr. Harsh Pandey, Adv. Mr. Awanish Gupta, Adv. Mr. Abhishek Gupta, Adv. Mr. Arijit Dey, Adv.
Table of Contents
2. Maintainability of suit without declaratory relief — Limitation period — Bona fides of subsequent purchasers — Indivisibility of agreement among joint vendees. (Para 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 )
3. Unilateral termination of non-determinable contracts is impermissible — Notice of prior agreement negates bona fide status if further inquiries are neglected — Readiness and willingness established by conduct. (Para 30 , 34 , 43 , 52 , 54 , 55 , 56 , 61 , 63 , 66 , 75 , 76 , 77 , 78 , 79 , 81 , 84 , 85 )
4. Suit for specific performance of non-determinable contract is maintainable without declaratory relief if termination is unilateral and not bona fide. (Para 43 , 61 )
5. Appeals dismissed — Specific performance decreed — Balance consideration with interest and additional compensation payable by vendees to subsequent purchasers. (Para 89 , 90 , 91 , 92 , 93 )
6. Is a suit for specific performance maintainable without seeking a declaration that the termination notice is invalid?
Yes, if the agreement is non-determinable and the termination is unilateral and not bona fide. However, if the contract confers a right to terminate or is determinable in nature, a declaratory relief is essential to clear the cloud on the contract's subsistence before granting specific performance. (Para 42 , 43 )
7. What constitutes a contract that is in its nature determinable under the Specific Relief Act?
A contract is determinable if it can be terminated at the sweet will of a party without reference to the other party, breach, or specific contingency. Contracts terminable only for breach or those tied to specific conditions are not determinable in nature. (Para 45 , 48 , 49 , 50 , 51 , 65 )
8. When is a subsequent transferee not considered a bona fide purchaser without notice?
When they have actual or constructive notice of the prior agreement and fail to exercise due care and attention, such as neglecting to verify the validity of a termination notice or confirming whether the earnest money was actually refunded. (Para 68 , 73 , 75 , 76 , 81 )
9. How is readiness and willingness evaluated under Section 16(c) of the Specific Relief Act?
Readiness refers to the financial capacity to perform the contract, while willingness refers to the conduct and genuine intent to perform. Both are judged based on the overall conduct of the plaintiff prior to and after filing the suit. (Para 82 , 83 )
JUDGMENT :
J.B. PARDIWALA, J.
For the convenience of exposition, this judgment is divided into the following parts:
| INDEX | |
| (A) | FACTUAL MATRIX |
| (B) | SUBMISSIONS OF THE PARTIES |
| (i) Submissions on behalf of the Appellants/Subsequent Purchasers | |
| (ii) Submissions on behalf of the Respondents/Original Vendees | |
| (C) | ANALYSIS |
| (I) Failure to challenge the legality and validity of termination of ATS in the suit | |
| (a) Views adopted by the High Courts on failure to seek declaration | |
| (b) Whether the ATS dated 28.04.2000 was in nature determinable? | |
| (II) Bona fides of the subsequent purchasers in purchasing the subject land | |
| (III) Readiness and willingness of the Original Vendees to perform the ATS | |
| (D) | CONCLUSION |
1. Leave Granted.
2. Since the issues raised in both the captioned appeals are the same, the parties are same, and the challenge is also to the self-same, judgment and order passed by the High Court, those were taken up for hearing analogously and are being disposed of by this common judgment and order.
3. These appeals arise from the common judgment and order passed by the High Court of Karnataka in the Regular First Appeal Nos. 4187 of 2013 and 4160 of 2012 respectively by which the High Court allowed the two appeals filed by the vendees and thereby, set aside the judgment and decree dated 21.07.2012 passed by the 2nd Additional Senior Civil Judge at Haveri, Karnataka (“Trial Court”) in Original Suit No. 36 of 2007, while granting the relief of specific performance of Agreement to Sell dated 28.04.2000 (“ATS”) executed by the Respondent Nos. 6 to 13 (“Original Vendors”) in favour of the Respondent Nos. 15 to 22 respectively & the Respondent Nos. 1 to 5 respectively (“Original Vendees”) and holding the Appellants herein (“Subsequent Purchasers”) not to be the bona fide purchasers of the subject land (as defined below) for value without notice.
(A) FACTUAL MATRIX
4. For the sake of convenience, the respective positions of the contesting parties to the present lis before the various courts leading upto this Court is tabularly illustrated herein below:
| BEFORE THIS COURT | BEFORE THE HIGH COURT | BEFORE THE TRIAL COURT | PARTICULARS |
| Appellants | Respondent Nos. 8 to 15 | Defendant Nos. 9 to 16 | Subsequent Purchasers of subject land |
| Respondent Nos. 1 to 5 (Legal Heirs of Defendant No. 7 on record) | Appellants | Defendant No. 7 | One of the Original Vendees of the subject land, however, he was arrayed as a defendant in the suit. This defendant supported the case of plaintiffs |
| Respondent Nos. 6 to 13 (Legal Heirs of Defendant Nos. 4 and 6 on record) | Respondent Nos. 1 to 6 | Defendant Nos. 1 to 6 | Original Vendors of the subject land |
| Respondent No. 14 | Respondent No. 7 | Defendant No. 8 | One of the Original Vendees of the subject land, however, he was arrayed as a defendant in the suit. This defendant was proceeded ex-parte by the Trial Court |
| Respondent Nos. 15 to 22 | Appellants | Plaintiffs | Original Vendees of the subject land |
| Respondent Nos. 15 to 22, Respondent Nos. 1 to 5, and Respondent No. 14 being the original purchasers of subject land are also collectively being referred to as “Original Vendees” in the present matter. | |||
5. On 28.04.2000, the original vendors executed an unregistered ATS in favour of the original vendees in respect of 354 Acres of Agricultural Watan Land bearing survey no. 12/2 part 12/2A situated in village Basavanakoppa, Taluk Shiggaon, District Haveri, Karnataka (“Subject Land”) for a total sale consideration of Rs. 26,95,501/- out of which the original vendees paid an amount of Rs. 2,00,000/- as earnest money to the original vendors. It was agreed that an additional amount of Rs. 5,00,000/- would be paid by the original vendees to the original vendors at the time of registration of the ATS and the balance sale amount wo
