Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(SC) 593

SUPREME COURT OF INDIA
DIPANKAR DATTA, MANMOHAN, JJ.
Sangita Sinha – Appellant
Versus
Bhawana Bhardwaj and Others - Respondents
Civil Appeal No. 4972 of 2025 [Arising Out of Special Leave Petition (C) No. 28460 of 2024]
Decided On : 04-04-2025

Advocates appeared:
For the Petitioner(s): Mr. S. B. Upadhyay, Sr. Adv. Mr. Rajiv Kumar Sinha, AOR Mr. Raj Kumar, Adv. Dr. Shilpa Bagade, Adv. Ms. Indu Kaul, Adv.
For the Respondent(s): Mr. Samrendra Kumar, Adv. Mr. Vivek Kumar Srivastava, Adv. Mr. Ravi Bhutan Upadhyay, Adv. Mr. Pawan Kumar, Adv. Mr. Vishal Arun Mishra, AOR Mr. Ardhendumauli Kumar Prasad, Sr. Adv. Mr. Ramesh Kumar Mishra, AOR Mr. Shivam Tiwary, Adv. Ms. Anusha Rathore, Adv. Mr. Shivank S Singh, Adv.

IMPORTANT POINTS
(1) Agreement to Sell – Suit for Specific Performance – ‘Readiness’ and ‘willingness’ are not one but two separate elements – Continuous readiness and willingness on part of Respondent No.1-buyer from date of execution of Agreement to Sell till date of decree, is a condition precedent for grant of relief of specific performance.
(2) Existence of a valid agreement is sine qua non for grant of relief of specific performance – Appellate court would not be precluded from examining whether jurisdictional fact exists for grant of relief of specific performance, notwithstanding fact that Trial Court omitted or failed to frame issue on maintainability of suit – Absent a prayer for declaratory relief that termination/cancellation of agreement is bad in law, suit for specific performance is not maintainable.

Headnote:
(A) Specific Relief Act, 1963 – Section 20 – Agreement to Sell – Suit for Specific Performance – ‘Readiness’ and ‘willingness’ are not one but two separate elements – Continuous readiness and willingness on part of Respondent No.1-buyer from date of execution of Agreement to Sell till date of decree, is a condition precedent for grant of relief of specific performance – Readiness and willingness of buyer to go ahead with sale of property at the time of institution of suit loses its relevance, if Respondent No.1-buyer is unable to establish that readiness and willingness has continued throughout pendency of suit – Once it is established that Respondent No. 1-buyer is not willing to perform contract, fact that entire advance consideration/earnest money had not been returned to Respondent No.1-buyer is irrelevant and immaterial – Act of Respondent No.1 buyer in encashing demand drafts leads to irresistible conclusion that agreement in question stood cancelled. (Paras 17, 18, 19, 20 and 21)
(B) Specific Relief Act, 1963 – Section 16(c) – Agreement to Sell – Suit for Specific Performance – Existence of a valid agreement is sine qua non for grant of relief of specific performance – Appellate court would not be precluded from examining whether jurisdictional fact exists for grant of relief of specific performance, notwithstanding fact that Trial Court omitted or failed to frame issue on maintainability of suit – Absent a prayer for declaratory relief that termination/cancellation of agreement is bad in law, suit for specific performance is not maintainable – Since in present case, seller had issued a letter cancelling agreement to sell prior to institution of suit, same constitutes a jurisdictional fact as till cancellation is set aside, respondent is not entitled to relief of specific performance – Agreement to Sell cannot be specifically enforced – Besides, not only did Respondent No. 1-buyer fail to seek declaratory relief, but also it failed to disclose in plaint that seller had issued cancellation letter enclosing therewith demand drafts and post-dated cheques – Failure of Respondent No. 1 buyer to disclose the same in her plaint amounts to suppression of material fact, disentitling her from discretionary relief of specific performance – Appellant is a beneficiary under Will executed by original owner/seller and being a necessary and interested party to lis, she has locus to file present appeal – Sale deed executed in favour of Respondent No.1-buyer in pursuance of impugned judgments declared as null and void and Appellant directed to refund balance sale consideration. (Paras 24, 25, 26, 27, 28, 29 and 30)
Facts of the case:
Primary issue that arises for consideration in present civil appeal is whether a suit for specific performance of an Agreement to Sell is liable to be decreed if buyer had accepted refund of majority of earnest money deposit/advance consideration, during pendency of civil suit?
Findings of Court:
Sale deed executed in favour of Respondent No.1-buyer in pursuance of impugned judgments is declared as null and void and Appellant is directed to refund balance sale consideration amount of Rs.24,61,000/- deposited by Respondent No.1-buyer in pursuance to impugned judgment and decrees.
Result : Appeal allowed.

Judgement Key Points

Based on the provided legal document, there is no indication that a suit for recovery was filed. The case primarily concerns a suit for specific performance of an agreement to sell, which was ultimately declared not enforceable, and the sale deed was declared null and void. The focus is on the validity of the agreement, the readiness and willingness of the buyer, and the cancellation of the agreement, rather than on a suit for recovery of money or property. Therefore, the document does not suggest that a suit for recovery was filed in this case.

JUDGMENT :

MANMOHAN, J.

1. Leave granted.

2. The primary issue that arises for consideration in the present civil appeal is whether a suit for specific performance of an Agreement to Sell is liable to be decreed if the buyer had accepted the refund of majority of the earnest money deposit/advance consideration, during the pendency of the civil suit?

3. Brief facts leading to the present appeal are as under:

3.2. On 25th January 2008, an unregistered Agreement to Sell with respect to the subject property was executed between the “Respondent No. 1-buyer”-plaintiff and the seller for a total sale consideration of Rs. 25,00,000/- (Rupees Twenty Five Lakhs). At the time of the execution of the Agreement to Sell, the Respondent No. 1- buyer paid a sum of Rs. 2,51,000/- (Rupees Two Lakh Fifty One Thousand) in cash to the seller and issued three post-dated cheques worth Rs. 7,50,000/- (Rupees Seven Lakh Fifty Thousand).

3.3. It is the case of Respondent No. 1-buyer that when she visited the subject property along with her husband on 11th February 2008, the tenants of the seller created a scuffle and forced them to return. In the circumstance, the Respondent No. 1-buyer issued legal notices dated 23rd February 2008 and 23rd April 2008, expressing her intention to pay the balance sale consideration and to get the property registered in her favour.

3.4. Upon the failure of the seller to execute the sale deed, Respondent No. 1-buyer filed a suit before the Trial Court, Sub Judge-IV, Patna under the Specific Performance Act, 1963 (“Act 1963)” seeking specific performance of the Agreement to Sell dated 25th January 2008 and the same was registered as Title Suit No. TS/176/2008 (“subject suit”).

3.5. The subject suit was contested by the seller by filing a written statement, stating therein that she came to know about the Agreement to Sell dated 25th January 2008 on 5th February 2008 and immediately thereafter, made a complaint dated 6th February 2008 with the Inspector of Police-cum-Station House Officer, Kankarbagh Police Station, Patna stating that her signatures had been fraudulently taken on the Agreement to Sell dated 25th January 2008. It was further stated that the seller issued a letter dated 7th January 2008 cancelling the Agreement to Sell dated 25th January 2008 and refunded Rs. 2,11,000/- (Rupees Two Lakh Eleven Thousand) through five demand drafts dated 7th February 2008 in lieu of the cash and returned two of the three post-dated cheques of Rs. 2,50,000/- (Rupees Two Lakh Fifty Thousand) each, which were issued by the seller. Vide Order dated 16th December 2008, issues were framed by the Trial Court.

3.6. Upon the demise of the seller, the Respondent No. 3 herein, who is the step grandson of the seller, was impleaded as substituted defendant no. 1 and the appellant herein was impleaded as defendant no. 3 as the subject property had been bequeathed in her favour by way of a Will dated 23rd September 2002 executed by the original owner/seller.

3.7. After consideration of the depositions of PW-1 (Respondent No. 1 herein) and her husband, PW-2, the Trial Court framed three additional issues vide order dated 21st January 2013. The issues were framed once again on 27th April 2018, and a judgment was passed in favour of Respondent No. 1-buyer on the same date.

3.8. The judgment dated 27th April 2018 and the decree dated 10th May 2018 were challenged by the appellant herein in First Appeal No. 83 of 2018. The said appeal was dismissed by the Patna High Court vide the impugned Judgment dated 9th May 2024.

3.9. Upon the present Special Leave Petition being filed, this Court, while issuing notice, had directed parties to maintain status quo with respect to the possession on 20th August 2024.

SUBMISSIONS ON BEHALF OF THE APPELLANT

4. Shri S.B