Readiness & Willingness Must Be Continuous; Madras HC Denies Specific Performance for 4-Year Delay After Final Payment - 2025-10-04

Madras High Court Denies Specific Performance, Cites Unexplained Delay After Final Payment

CHENNAI: The Madras High Court, in a significant ruling on contract law, has modified a trial court's decree for specific performance, holding that an unexplained delay by a buyer after fulfilling their payment obligations demonstrates a lack of continuous readiness and willingness to perform the contract. Justice M. Jothiraman, while allowing an appeal in part, directed the seller to refund the entire sale consideration with interest instead of executing the sale deed.

The Court emphasized that under Section 16(c) of the Specific Relief Act, 1963, a plaintiff must not only aver but also prove a continuous readiness and willingness to perform their contractual duties from the date of the agreement until the suit is filed.

Background of the Dispute

The case revolves around a shop (No. AU-19) in the Koyambedu Vegetable Market Complex, originally allotted to R. Ramiah by the Chennai Metropolitan Development Authority (CMDA) on a hire-purchase basis.

In November 2000, Ramiah entered into a sale agreement with S. Raja Mohamed to sell the shop. The agreement was contingent on CMDA first executing the sale deed in favour of Ramiah. Raja Mohamed paid the initial consideration, took possession, and proceeded to pay the 40 quarterly instalments to CMDA over a period of 10 years, completing them in 2011.

However, disputes arose between the parties, leading to years of litigation. Ramiah attempted to unilaterally cancel the Power of Attorney he had granted to Raja Mohamed, a move that was later declared null and void by the courts. Despite the protracted legal battles, Raja Mohamed filed the suit for specific performance only in 2015, four years after making the final payment to CMDA.

The II Additional City Civil Court, Chennai, had initially decreed the suit in favour of Raja Mohamed, directing the execution of the sale deed. Aggrieved, Ramiah appealed to the High Court.

Arguments Before the High Court

Appellant's Contentions (R. Ramiah): Mr. A.K. Sriram, Senior Counsel for the appellant, argued that the suit was not maintainable. Key arguments included: * The sale agreement was legally unenforceable as the CMDA allotment order (Ex.B2) contained a specific clause barring alienation or transfer of possession without prior approval. * The suit was hopelessly barred by limitation, having been filed in 2015 for an agreement made in 2000. * The plaintiff, Raja Mohamed, had failed to prove his continuous readiness and willingness to perform the contract as required by law. * The suit was also barred under Order II, Rule 2 of the CPC, as the plaintiff could have sought the relief of specific performance in the earlier suits filed between the parties.

Respondent's Contentions (S. Raja Mohamed): Mr. R. Subramaniam, counsel for the respondent, countered that: * Ramiah had admitted to executing the sale agreement and had failed to prove his claim that it was merely for a loan transaction. * The bar on alienation in the allotment order was not a valid defence, as CMDA had effectively waived this condition by its conduct—receiving payments from Raja Mohamed, issuing him a trade license, and acknowledging his possession. * The suit was not time-barred because the agreement was a "contingent contract," with the timeline for performance starting only after CMDA executed the sale deed in favour of Ramiah, an event which had not yet occurred. * The plaintiff had demonstrated his willingness by paying the entire hire-purchase amount of Rs. 14,00,548/- to CMDA.

Court's Reasoning and Pivotal Findings

Justice Jothiraman systematically addressed each legal issue raised in the appeal. While the Court found the sale agreement to be valid and enforceable and held that the suit was not barred by limitation or Order II, Rule 2, it ultimately decided the case on the crucial issue of "readiness and willingness."

The Court observed:

"Though the plaintiff contended that he has paid 40 instalments to CMDA commencing from the year 2001 and completed the entire payments in the year 2011... Admittedly, after completion of entire payments in the year 2011, the plaintiff has neither chosen to send any notice to the 3rd defendant nor to CMDA for demanding execution of sale deed as per Ex.A3- Sale Agreement."

The judgment highlighted that the plaintiff's inaction between 2011 and the filing of the suit in 2015 was a critical flaw in his case.

"The conduct of the plaintiff from 2011 to till filing of the Suit in the year 2015, is unexplained, since the plaintiff had chosen to file two suits as against the 3rd defendant in the years 2003 and 2004 itself."

Applying the principles laid down by the Supreme Court, the High Court concluded that this unexplained gap demonstrated that Raja Mohamed was not continuously ready and willing to see the contract through. The Court noted that specific performance is an equitable and discretionary remedy, not an automatic right, and the plaintiff's conduct did not warrant such relief.

The Final Verdict

In its final order, the Madras High Court partly allowed the appeal and modified the trial court's decree.

• The relief of specific performance was denied.
• The suit was decreed for the alternative relief of a refund.
• The appellant, R. Ramiah, was directed to refund the entire sale consideration of Rs. 14,00,548/- to the respondent, S. Raja Mohamed, along with interest at 6% per annum from the date of the suit until realisation.