2026 Supreme(Online)(Del) 6578

IN THE HIGH COURT OF DELHI AT NEW DELHI
Tejas Karia, J
Ravi Arora – Appellant
Versus
J.S. Malik – Respondent
CS(OS) 497/2004|I.A. 2994/2004|I.A. 6121/2004|I.A. 9911/2005

To obtain specific performance, a party must prove continuous readiness and willingness, including sustained financial capacity. In contracts for immovable property, persistent delays and financial instability during periods of rapid price appreciation render the equitable relief of specific performance unsustainable.

Headnote:(A) Specific Relief Act, 1963 - Section 16(c) - Suit for specific performance of contract for sale of immovable property - Essential requirement of continuous "readiness and willingness" - Party seeking relief must prove financial capacity and preparedness throughout the material period - Mere deposit of funds at a belated stage during litigation does not suffice. (Paras 9, 10, 42, 43 and 46)

(B) Contracts - Principle of time being the essence of contract - While generally not stipulated for immovable property, economic conditions of galloping inflation in urban centers necessitate relaxation of this rule - Purchaser's failure to perform within a reasonable timeframe, combined with lack of funds, renders specific performance inequitable. (Paras 28, 29, 30 and 44)

(C) Forfeiture - Earnest money vs. part payment - Penalty for breach - Absence of express forfeiture clause in the agreement - Unilateral retention of advance payments without contractual authorization is illegal and arbitrary - Refund of deposit with interest is appropriate when specific performance is denied. (Paras 37, 38, 39, 40 and 47)

Facts of the case:
The purchaser initiated a suit for the specific performance of a contract regarding an immovable residential property. The vendor had agreed to sell the property upon conversion from leasehold to freehold status. The purchaser failed to tender the balance consideration within the stipulated period following the notification of the conversion. The vendor treated the contract as rescinded due to the purchaser's failure to make timely payments despite repeated demands. The purchaser contended that the delay was attributable to the vendor's failure to complete necessary formalities.

Findings of Court:
The court found that the purchaser failed to demonstrate consistent financial capacity and readiness to perform their obligations. The evidence showed that the purchaser sought financial assistance in installments long after the due date had passed. The court held that the delay, coupled with the sharp appreciation in property values, made the grant of specific performance inequitable. However, since the agreement lacked a specific forfeiture clause, the vendor was not entitled to retain the advance sum, and a refund was directed with interest.

Issues: 1. Whether the purchaser fulfilled the mandate of "readiness and willingness" required for specific performance. 2. Whether the contract could be unilaterally rescinded due to the purchaser's failure to pay within the timeline. 3. Whether the advance payment was subject to forfeiture in the absence of an explicit contractual clause.

Ratio Decidendi: The court reasoned that the relevant legislation requires continuous readiness and willingness. Financial inability and failure to comply with contractual timelines, especially in an era of property price inflation, disentitle a party from equitable relief. Furthermore, forfeiture is in the nature of a penalty and cannot be enforced without clear contractual language or proof of loss, necessitating a refund of the advance to prevent unjust enrichment.

Result: Suit for specific performance dismissed; vendor directed to refund the advance amount with interest at 9% per annum.