SUPREME COURT OF INDIA
HON'BLE MR. JUSTICE MANOJ MISRA, HON'BLE MR. JUSTICE UJJAL BHUYAN
ANNAMALAI – Appellant
Versus
VASANTHI – Respondent
C.A. No.-013076-013077 - 2025

High Court cannot interfere with findings of fact by first appellate court under Section 100 CPC unless perverse; acceptance of additional consideration after expiry of stipulated time waives forfeiture clause and indicates readiness and willingness.

Headnote:(A) Specific Relief Act, 1963 - Sections 10, 14, 20 - Indian Contract Act, 1872 - Section 55 - Code of Civil Procedure, 1908 - Section 100 - Specific performance of agreement for sale - High Court's interference with findings of fact by first appellate court - Readiness and willingness of plaintiff - Effect of acceptance of additional consideration after expiry of stipulated time - Maintainability of suit without seeking declaration against termination of contract - Discretionary relief - Principles for grant of specific performance.

(B) High Court under Section 100 CPC - Interference with findings of fact is limited to cases where finding is based on inadmissible evidence, ignores relevant admissible evidence, is based on misreading of evidence, or is perverse - First appellate court is final court of fact - High Court exceeded its jurisdiction by discarding endorsement of receipt of additional amount when signatures were admitted - (Paras 15-17).

(C) Readiness and willingness - To be determined on entirety of facts and circumstances including conduct of parties - Where more than 90% of sale consideration already paid and additional amount accepted after expiry of stipulated period, plaintiff must be held ready and willing - Acceptance of additional amount after expiry of six months waives right to forfeit earnest money on non-payment of balance - (Paras 18-20).

(D) Suit for specific performance - Maintainability without seeking declaration that termination of contract is invalid - Not required where contract does not confer unilateral right to terminate or where such right is waived - Unilateral termination after breach by vendors treated as repudiation - Plaintiff can treat contract as subsisting and sue for specific performance - (Paras 26-33). (E) Discretion under Section 20 - Not to be denied on ground that plaintiff claimed possession without recital in agreement - Claim not proved does not make it false - No substantial gain by claiming possession - Discretion cannot be denied where plaintiff had paid over 90% of consideration and additional amount and defendant-vendors were not bona fide - (Paras 37-39).

Facts of the case:
The appellant filed a suit for specific performance of an agreement for sale dated 08.01.2010 under which he paid Rs.4,70,000 out of total Rs.4,80,000. The vendors later demanded additional Rs.2,00,000, and the appellant paid Rs.1,95,000 on 09.06.2010, making an endorsement on the back of the agreement. Subsequently, the vendors sold part of the property to the daughter of one vendor (a related party) and sent a termination notice. The trial court dismissed the suit, holding the agreement was to secure a loan. The first appellate court reversed, decreeing specific performance. The High Court in second appeal set aside the decree and ordered refund of earnest money. The Supreme Court allowed the appeals, restoring the first appellate court's decree.

Findings of Court:
The High Court erred in interfering with findings of fact of the first appellate court regarding payment of additional amount and readiness and willingness. The suit was maintainable without declaration challenging termination. The appellant was entitled to discretionary relief of specific performance. The balance amount of Rs.10,000 to be deposited in execution court within one month.

Issues: (i) Whether the High Court was justified in interfering with the finding of the first appellate court that additional Rs.1,95,000 was paid by the plaintiff? (ii) Whether the suit for specific performance was maintainable without seeking a declaration that termination of the agreement was invalid? (iii) Whether the plaintiff was entitled to discretionary relief of specific performance?

Ratio Decidendi: Once signatures on a document acknowledging receipt of money are admitted, a presumption arises that it was endorsed for good consideration; the burden shifts to the signatory to explain. Acceptance of additional consideration after expiry of stipulated time waives the right to forfeit earnest money and indicates that the contract is subsisting. A declaratory relief is not required where termination is a void act or a breach by repudiation. Discretion to refuse specific performance cannot be exercised on grounds of a mere unproved claim of possession. Result : Appeals allowed - Judgment and decree(s) of the High Court set aside - Decree of first appellate court restored - Plaintiff-appellant directed to deposit balance amount of Rs.10,000 in the execution court within one month - Parties to bear their own costs.