Readiness and willingness for specific performance requires proof of financial capacity; contemporaneous MOUs are integral to the main agreement; failure to perform obligations under ancillary documents precludes enforcement.

Headnote:(A) Code of Civil Procedure, 1908 - Section 96 read with Order 41 Rule 1 - Specific performance of contract - Agreement of sale - Readiness and willingness to perform contract - Plaintiff failed to prove readiness and willingness, as financial capacity was not established; bank statements showed minimal balance; cheques issued under related MOU were dishonoured; family income was insufficient to pay balance consideration. (Paras 27, 28, 46, 47)

(B) Specific performance - Partial performance - Agreement of sale did not confer right on plaintiff to seek performance for a portion of the property; such option under Clause-8 was available only to vendors if purchasers defaulted. (Para 45)

(C) Contract - Contemporaneous documents - MOU dated 12.01.2005 between plaintiff, defendant No.7, and defendant No.8 was integral to enforceability of sale agreement; performance of sale agreement depended on discharge of obligation under MOU, which plaintiff failed to fulfill. (Paras 42, 46)

(D) Sale deed - Fraud - No fraud established in execution of sale deed by defendant Nos.1 to 6 in favour of defendant No.10 where defendant No.8 acted as witness; plaintiff's failure to perform his part of obligation and to prove readiness and willingness precluded claim of collusion. (Paras 47, 48) (E) Appeal - Settlement - During hearing, parties agreed to full and final settlement of all claims for Rs.5,00,00,000/- to be paid by respondents to appellant; Trial Court judgment affirmed subject to settlement terms. (Paras 48, 49, 50)

Facts of the case:
The appellant/plaintiff filed suit for specific performance of an agreement of sale dated 12.01.2005 for suit 'A' schedule property (8 acres 2 guntas) for Rs.15,10,000/- per acre. Rs.50,00,000/- advance was paid equally by plaintiff and defendant No.7. Performance period was 5 months. A contemporaneous MOU required payment of Rs.1,11,89,500/- to defendant No.8 to cancel a prior sale agreement. Plaintiff's cheques under the MOU were dishonoured. Defendants sold the property to defendant No.10. Trial Court partly decreed suit, ordering refund of Rs.25,00,000/- with 12% interest to plaintiff from defendant Nos.1 to 6, but refused specific performance and damages.

Findings of Court:
The Court found that the appellant/plaintiff failed to prove readiness and willingness to perform his part of the contract. The contemporaneous MOU between plaintiff, defendant No.7, and defendant No.8 was integral to the sale agreement's enforceability; plaintiff's failure to honour the MOU (cheques dishonoured) rendered the sale agreement unenforceable. No fraud was established in the sale to defendant No.10. However, during hearing, parties arrived at a settlement for Rs.5,00,00,000/- to be paid by respondents to appellant as full and final settlement.

Issues: The main issues were whether the appellant/plaintiff proved readiness and willingness to perform the contract, and whether the sale deed in favour of defendant No.10 was vitiated by fraud and collusion.

Ratio Decidendi: The court ruled that readiness and willingness requires proof of financial capacity, which was absent; that contemporaneous documents must be read together, and failure to perform obligations under ancillary agreements (MOU) disentitles specific performance; and that without proof of readiness and willingness, a claim of fraud in subsequent transfer cannot succeed.

Result: Appeal disposed of in terms of settlement; Trial Court judgment affirmed; parties directed to comply with settlement terms; no order as to costs. (Paras 39, 48, 49, 50, 51) After hearing both sides and considering the settlement, the Court disposed of the appeal.

Table of Content
1. parties and factual background of the specific performance suit (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8 , 9 , 10)
2. plaintiff's case for specific performance or damages (Para 11)
3. defendants' contentions against plaintiff's claims (Para 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20 , 21 , 22 , 23)
4. trial court's findings and high court's analysis on readiness and willingness (Para 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47)
5. appellant's and respondents' arguments on appeal (Para 32 , 33 , 34 , 35 , 36 , 37 , 38)
6. final settlement and directions for payment (Para 48 , 49 , 50 , 51)

CAV JUDGMENT

(PER: HON'BLE MR. JUSTICE D K SINGH)

I PREFACE:

1. The present Regular First Appeal has been filed under Section 96 read with Order XLI Rule 1 of the Code of Civil Procedure, 1908 against the judgment and decree dated 16.02.2018 passed in O.S.No.2291/2006 by the 1st Additional Senior Civil Judge, Bengaluru Rural District, Bengaluru.

2. The appellant/plaintiff has filed the aforesaid suit against the defendants for the relief of specific performance of the terms of the agreement of sale dated 12.01.2005 with a direction to the defendant Nos.1 to 10 to execute the registered sale deed in respect of the suit 'B' schedule property and also to deliver possession of the said property in his favour and in the alternative, for award of damages to the tune of Rs.60,77,750/- and for refund of advance sale consideration of Rs.25,00,000/- with interest @24% p.a. from the date of the suit till complete realisation.

3. The Trial Court has allowed the suit in part and held that the plaintiff would be entitled to recover from the defendant Nos.1 to 6, the advance sale consideration of Rs.25,00,000/- with interest at the simple rate of 12% p.a. from the date of the agreement of sale i.e. 12.01.2005 till realization and the defendant Nos.1 to 6 have been held to be jointly and severally liable to pay the aforesaid amount to the plaintiff. The Trial Court, however, has rejected the claim of the plaintiff for specific performance of the terms of the sale agreement dated 12.01.2005 and for the alternative relief of liquidated damages.

4. The parties are referred to as per their ranking before the Trial Court, for the sake of convenience.

II. FACTS:

5. The plaintiff claims to be a Chartered Accountant and also has some land holdings. The aggregate income of the plaintiff's family was below Rs.2,00,000/- per year on an average for the preceding 5 years from the year 2005. The plaintiff and the defendant No.7, with an intention to purchase agricultural lands near Yelahanka, Bengaluru, have approached the defendant Nos.1 to 6, who represented that they were the absolute owners of the suit 'A' schedule property bearing Survey No.52 measuring 8 acres 2 guntas situated at Bellahally Village of Bengaluru North Taluk. The negotiations to purchase the said land by the plaintiff and the defendant No.7 from the defendant Nos.1 to 6 took place in the presence of the defendant Nos.8 and 9. After negotiation, the agreement of sale dated 12.01.2005 was executed by the defendant Nos.1 to 6 in favour of the plaintiff and the defendant No.7 agreeing to sell the suit 'A' schedule property jointly in favour of the plaintiff and the defendant No.7 for a lawful consideration of Rs.15,10,000/- per acre amounting to Rs.1,26,84,000/-. The defendant Nos.1 to 6 had also acknowledged receipt of Rs.50,00,000/- towards part payment of the sale consideration.

6. Under the sale agreement, the period for performance of the contract was fixed at 5 months. The defendant Nos.1 to 6 had agreed to make good the marketable title over the suit 'A' schedule property by that time. It was agreed between the parties that if the defendant Nos.1 to 6 fail to execute the sale deed in favour of the plaintiff and the defendant No.7, then the prospective purchasers would be entitled to sue for specific performance of the terms of the sale agreement or at their op

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2026 Supreme(Online)(Kar) 27203

THE HIGH COURT OF KARNATAKAD K SINGH AND T.M.NADAFSRI. VILANGAT XAVIER JOSE – AppellantVersusSRI. SYED ANWAR – RespondentRFA 906/2018

Readiness and willingness for specific performance requires proof of financial capacity; contemporaneous MOUs are integral to the main agreement; failure to perform obligations under ancillary documents precludes enforcement.

THE HIGH COURT OF KARNATAKA
D K SINGH AND T.M.NADAF
SRI. VILANGAT XAVIER JOSE – Appellant
Versus
SRI. SYED ANWAR – Respondent
RFA 906/2018