Readiness and willingness to perform a contract must coexist for enforcing specific performance under the Specific Relief Act; failure to prove financial capability negates entitlement to specific performance.

JUDGMENT :

ANIL KSHETARPAL, J.

1. The Appellants have preferred the present Appeal assailing the correctness of the judgment dated 15.02.2021 [hereinafter referred to as the “Impugned Judgment”] while decreeing the suit of the Respondent for specific performance of an Agreement to Sell [hereinafter referred to as the “ATS”], executed on 22.01.2008, in respect of the residential house bearing No. C-20, Ashok Vihar, Phase-I, Delhi-110052, on payment of the balance sale consideration of Rs. 5,21,00,000/- (Rupees Five Crores Twenty-One Lakhs only).

Brief Factual Matrix:

2. The sale consideration was pegged at Rs. 6,11,00,000/- (Rupees Six Crores Eleven Lakhs only). The execution of the ATS on receipt of Rs. 60,00,000/- (Rupees Sixty Lakhs only) as earnest money is admitted by the parties. An additional payment of Rs. 30,00,000/- (Rupees Thirty Lakhs only) on 24.03.2008 is also not in dispute. It was agreed between the parties that the sale deed would be executed on 10.05.2008, after the Appellants [defendants before the learned Single Judge] had the property mutated in their favour and converted into freehold, the property having originally been leasehold. In substance, the property was initially owned by the Appellants‟/Defendants‟ mother, who passed away, whereupon it was to be mutated in favour of the Appellants/Defendants in the official record. Since it was a leasehold property, the Appellants/Defendants were required to get it converted into freehold. For the purpose of deciding the present case, the relevant clauses are extracted hereinbelow:

“5. That balance amount of Rs.5,51,00,000/- (Rupees five crore fifty one lacs only) is to be paid by the Second Party on or before 10.05.2008, or on the execution of relevant documents by the First Party, in the office of the concerned Sub-Registrar in the name of the above said purchaser or his Nominee.(s) and handing over possession by this date.

6. That the first party has agreed above shall get the mutation and free hold done before the final date of payment i.e 10.05.2008. The final payment will be made only after the conversion and mutation of above mentioned property is completed.

7. That the First Party shall deliver all the original documents relating to the said Property to the Second Party at the time of final payment of the sale consideration by the Second Party or at the time of registration of Sale-Deed inthe office of concerned Sub-Registrar.”

3. On 19.08.2008, the Respondent [Plaintiff before the learned Single Judge] filed a suit for specific performance of the ATS with consequential relief of permanent injunction, while asserting that he was always ready and willing to perform his part of the contract, however, the Defendants failed to fulfill their obligation of getting the property mutated and converted into freehold. It was also alleged that on 10.05.2008, the Appellants/Defendants were not available at their residence, as they were away in Punjab, and that on 06.06.2008, upon enquiry regarding the arrival of the Appellants/Defendants, the Respondent/Plaintiff contacted them, but the Appellants/Defendants asked for ten more days‟ time. Subsequently, on 22.06.2008, a meeting took place between the parties, and the Appellants/Defendants promised to transfer the property and execute the sale deed. The Appellants/Defendants failed to take steps, and on 16.07.2008, the Respondent/Plaintiff sent a notice to the Appellants/Defendants, but there was no response. Hence, the Respondent/Plaintiff filed the suit on 19.08.2008.

4. The Appellants/Defendants, while contesting the suit, asserted that the Respondent/Plaintiff neither had the balance sale consideration nor was prepared to get the sale deed executed on payment of balance amount in their favour. They further contended that they had been misle