Role of Section 16 and 20 of the Specific Relief Act

Section 16 and 20 Specific performance of agreement of sale – Time not essence of court

Failure of appellant – 1) vendee to pay the balance of sale consideration within stipulated
time but didn’t pay on time– Grant of relief of specific performance which is an equitable
remedy – Discretion of Court. Vendor mortgaged the prop because vendee failed. No entire
relief because he didn’t pay. No proof of readiness or willingness. Equitable relief

Shaik Mahaboob Sahab v. K. Nageswara Rao; 2008 (3) ALT 144.

Discretion be exercised in a proper and judicious manner as per guidelines furnished in

section 20 – Respondent agreed to sell the land to clear loans due to Bank and other creditors
– Agreement stipulated that appellant - vendee should pay certain amount out of sale
consideration directly to bank by a certain date – Nothing to show that appellant made any
efforts to pay the said amount to bank either by that date or at any time thereafter due to
default committed by appellant, respondent discharged bank loan by mortgaging his and his
relations’ properties – Non – payment of amount by appellant resulted in accumulation of
interest – Non – remittance of amount to bank by appellant up to date of filing of suit which
is more than two years from due date indicating that he was neither ready nor willing to
discharge his obligation – Evidence of appellant’s witness itself showing that the witness
cancelled the agreement of sale entered into by him with appellant due to non-payment of
consideration – the said evidence demonstrating absence of readiness or willingness to pay
the balance of sale consideration on the part of appellant – In such circumstance of the case,
court can exercise its discretion and refuse relief of specific performance sought by appellant
– Dismissal of suit by appellant court – Upheld. Shaik Mahaboob Sahab v. K. Nageswara
Rao; 2008 (3) ALT 144.

Discretion granted to pf should not put def in a disadvantage

Further, in the case of Surinder Kumar V. Bahadur Singh –

A party cannot claim that though he may not perform his part of the contract, he is entitled
for specific performance of the same. It is incumbent on the party, who wants to enforce
specific performance of contract to aver or prove that he has performed or has always been
ready to perform the essential terms of the contract. party no entire relief- if essentials of
contract not fulfilled.
Merely because the plaintiff is legally right does not bind the court to grant him relief. Court
while exercising discretionary power is bound to exercise the same on established judicial
principles and in a reasonable manner. Even if the contract is otherwise not voidable, but
circumstances make it inequitable to enforce specific performance, courts can refuse the grant
of such discretionary relief.

The case also highlights discretion of the court in specific performances –

1. Where the terms of the contract or the conduct of the parties at the time of entering
into the contract or the other circumstances under which the contract was entered into
are such that the contract though not voidable, gives the plaintiff an unfair advantage
over the defendant;
2. Where the performance of the contract would involve some hardship on the defendant
which he did not foresee, whereas its non-performance would involve no such
hardship to the plaintiff;
3. Where the defendant entered into the contract under circumstances which though not
rendering the contract voidable, makes it inequitable to enforce specific performance.

Cases for specific Instances where conduct of pf influence the readiness and willingness of
the plaintiff

1. Passage of time while seeking relief – “Long lapse of time” Interpretation of long
lapse of time is subject to specific circumstances however, passage of time will affect
the court’s discretion to grant relief if such passage of time puts the defendant in a
disadvantaged position, Vemuri Krishna Prasad Vs. Ghorpada Radha Bai (2010
(4) ALT 305),
2. Increase in the value of the property -If it is proved with sufficient lapse of time and
grant of relief to the plaintiff for the consequences of the market forces for the price of
the property, will be inequitable to the defendant because the defendant will have to
take the burden of such relief - Vimaleswar Nagappa Shetty Vs. Noor Ahamad
Sharif (AIR 2011 SC 2057)
3. Long unavailable period of silence/ inactivity on part of the plaintiff - In assessing
question of readiness and willingness of the vendee to perform his part of the contract,
court can take into account long, unexplained silence and inaction on the part of
vendee. Continuous readiness and willingness on the part of vendee is a conditional
 precedent to grant relief of specific performance. Sardar Amarjeeth Singh Vs.
Nandubai (1998(5) ALT 412 (DB)
4. Plaintiff approaches the court with the false version of the facts and it is immaterial if
the understanding of the facts is done bonafide or malafide. Irrespective the plaintiff
will not be entitled for relief. In this case, the plaintiff alleged payment through the
promissory notes and further alleged execution through instalments. But the court
disbelieved the promissory note and discharge endorsements and payments receipts
for want of proof with detailed reasons and found that the plaintiff had not approached
the court with true version and negatived the relief of specific performance.
Mullapudi Venkata Rayudu Vs. Smt. Kakarla Madhubala(2006 (5) ALT 30)

Deepshika

In Saradamani Kandappan v. S. Rajalakshmi, (2011) 12 SCC 18, Thus, where time 59 can
be said to be of the essence in the facts of a given case, and the purchaser does not take steps
to complete the sale within the stipulated period and the vendor is not responsible for any
delay, the steep rise in price within the stipulated time would be a circumstance which would
make it inequitable to grant the relief of specific performance. This Court held: “36. The
principle that time is not of the essence of contracts relating to immovable properties took
shape in an era when market values of immovable properties were stable and did not undergo
any marked change even over a few years (followed mechanically, even when value ceased to
be stable). As a consequence, time for performance, stipulated in the agreement was assumed
to be not material, or at all events considered as merely indicating the reasonable period
within which contract should be performed. The assumption was that grant of specific
performance would not prejudice the vendor defendant financially as there would not be
much difference in the market value of the property even if the contract was performed after a
few months. This principle made sense during the first half of the twentieth century, when
there was comparatively very little inflation, in India. The third quarter of the twentieth
century saw a very slow but steady increase in prices. But a drastic change occurred from the
beginning of the last quarter of the twentieth century. There has been a galloping inflation and
prices of immovable properties have increased steeply, by leaps and bounds. Market values of
properties are no longer stable or steady. We can take judicial notice of the comparative
purchase power of a rupee in the year 1975 and now, as also the steep increase in the value of
the immovable properties between then and now. It is no exaggeration to say that properties
in cities, worth a lakh or so in or about 1975 to 1980, may cost a crore or more now. 60 37.
The reality arising from this economic change cannot continue to be ignored in deciding cases
 relating to specific performance. The steep increase in prices is a circumstance which
makes it inequitable to grant the relief of specific performance where the purchaser does
not take steps to complete the sale within the agreed period, and the vendor has not been
responsible for any delay or non-performance. A purchaser can no longer take shelter
under the principle that time is not of essence in performance of contracts relating to
immovable property, to cover his delays, laches, breaches and “nonreadiness”. The
precedents from an era, when high inflation was unknown, holding that time is not of the
essence of the contract in regard to immovable properties, may no longer apply, not because
the principle laid down therein is unsound or erroneous, but the circumstances that existed
when the said principle was evolved, no longer exist. In these days of galloping increases in
prices of immovable properties, to hold that a vendor who took an earnest money of say about
10% of the sale price and agreed for three months or four months as the period for
performance, did not intend that time should be the essence, will be a cruel joke on him, and
will result in injustice. Adding to the misery is the delay in disposal of cases relating to
specific performance, as suits and appeals therefrom routinely take two to three decades to
attain finality. As a result, an owner agreeing to sell a property for rupees one lakh and
received rupees ten thousand as advance may be required to execute a sale deed a quarter
century later by receiving the remaining rupees ninety thousand, when the property value has
risen to a crore of rupees. In another decision between Vimaleswar Nagappa Shetty Vs. Noor
Ahamad Sharif (AIR 2011 SC 2057) in Para No.9, it was held that, “it is settled that sec.20
of the Act confers discretion powers. It is also well settled the value of the property escalates
in urban areas very fast it would not be executable to grant specific performance after a lapse
of long period of time.
1. In Ramathal v. Maruthathal, (2018) 18 SCC 303, this Court held: “22. The buyer has taken
prompt steps to file a suit for specific performance as soon as the execution of the sale was
stalled by the seller. From this discussion, it is clear that the buyer has always been ready and
willing to perform his part of the contract at all stages. Moreover, it is the seller who had
always been trying to wriggle out of the contract. Now the seller cannot take advantage of
their own wrong and then plead that the grant of decree of specific performance would be
inequitable. Escalation of prices cannot be a ground for denying the relief of specific
performance. Specific performance is an equitable relief and granting the relief is the
discretion of the court. The discretion has to be exercised by the court judicially and within
the settled principles of law. Absolutely there is no illegality or infirmity in the judgments of
the courts below, which has judicially exercised its discretion and the High Court ought not to
have interfered with the same.
2. The courts will apply greater scrutiny and strictness when considering whether the purchaser
was “ready and willing” to perform his part of the contract- K.S. Vidyanadam [(1997) 3 SCC
1]
3. In Nanjappan v. Ramasamy, (2015) 14 SCC 341, the suit for specific performance was filed
many years after the agreement dated 30.09.1987, which agreement was extended by three
years twice and thereafter, by another two years. It was only after these extensions and
exchange of legal 63 notices between the parties that the respondents filed a suit for specific
performance. It was in this factual background that the Court held: “10. In a suit for specific
performance, the plaintiff has to aver and prove with satisfactory evidence that he was always
ready and willing to perform his part of contract at all material time as mandatorily required
under Section 16(c) of the Specific Relief Act, 1963.
4. It is pertinent to note that the time for performance of contract was extended again and again
totalling period of eight years. Even though the first appellate court and the High Court
recorded findings that the respondent-plaintiffs were ready and willing to perform their part of
contract, the fact that time was extended for eight years is to be kept in view while
considering the question whether discretion is to be exercised in favour of the respondent-
plaintiffs.”
5. As has been found earlier in this judgment, the defendants were held to have taken up
dishonest pleas and also held to have been in breach of a solemn agreement in which they
were to obtain the Urban Land Ceiling permission which, if not obtained, would, under the
agreement itself, not stand in the way of the specific performance of the agreement between
the parties. He who asks for equity must do equity. Given the conduct of the defendants in
this case, as contrasted with the conduct of the appellant who is ready and willing throughout
to perform its part of the bargain, we think this is a fit case in which the Division Bench 66
judgment should be set aside. As a result, the decree passed by the Single Judge is restored.
Since the appellant itself offered a sum of Rs.1.25 crores to the Division Bench, it must be
made to pay this amount to the respondents within a period of eight weeks from the date of
this
judgment-https://main.sci.gov.in/supremecourt/2007/18318/18318_2007_33_1501_24337_Ju
dgement_12-Oct-2020.pdf- FERRODOUS ESTATES (PVT.) LTD vs. P. GOPIRATHNAM
(DEAD) & ORS.
6. Where Plaintiff and seek relief- In Sardar Amarjeeth Singh Vs. Nandubai (1998(5) ALT
412 (DB), it is held that, increase in prices in urban areas may also be one of the
considerations in granting relief long after expiry of time limit though suit is filed within
period of limitation. In assessing question of readiness and willingness of the vendee to
perform his part of the contract, court can take into account long, unexplained silence and
 inaction on the part of vendee. Continuous readiness and willingness on the part of vendee is
a conditional precedent to grant relief of specific performance.
7. Mullapudi Venkata Rayudu Vs. Smt. Kakarla Madhubala(2006 (5) ALT 30) it is held that,
when the plaintiff does not approach the court with true version, the plaintiff is not entitled
for specific performance. In the said case, the defendant lady entered into agreement of sale,
because of some problem from her brother and other kith and kin, some amount was paid as
earnest money on the date of agreement. Plaintiff alleged that a promissory note has been
executed towards balance of sale consideration and further pleaded that he discharged the
promissory note amount in instalments. But, the court disbelieved the promissory note and
discharge endorsements and payments receipts for want of proof with detailed reasons and
found that the plaintiff had not approached the court with true version and negatived the relief
of specific performance.
8. In Ramathal v. Maruthathal, (2018) 18 SCC 303, this Court held: “22. The buyer has taken
prompt steps to file a suit for specific performance as soon as the execution of the sale was
stalled by the seller. From this discussion, it is clear that the buyer has always been ready and
willing to perform his part of the contract at all stages. Moreover, it is the seller who had
always been trying to wriggle out of the contract. Now the seller cannot take advantage of
their own wrong and then plead that the grant of decree of specific performance would be
inequitable. Escalation of prices cannot be a ground for denying the relief of specific
performance. Specific performance is an equitable relief and granting the relief is the
discretion of the court. The discretion has to be exercised by the court judicially and within
the settled principles of law. Absolutely there is no illegality or infirmity in the judgments of
the courts below, which has judicially exercised its discretion and the High Court ought not to
have interfered with the same.

9. The courts will apply greater scrutiny and strictness when considering whether the purchaser
was “ready and willing” to perform his part of the contract- K.S. Vidyanadam [(1997) 3 SCC
1]
10. In Nanjappan v. Ramasamy, (2015) 14 SCC 341, the suit for specific performance was filed
many years after the agreement dated 30.09.1987, which agreement was extended by three
years twice and thereafter, by another two years. It was only after these extensions and
exchange of legal 63 notices between the parties that the respondents filed a suit for specific
performance. It was in this factual background that the Court held: “10. In a suit for specific
performance, the plaintiff has to aver and prove with satisfactory evidence that he was always
ready and willing to perform his part of contract at all material time as mandatorily required
under Section 16(c) of the Specific Relief Act, 1963.
11. It is pertinent to note that the time for performance of contract was extended again and again
totalling period of eight years. Even though the first appellate court and the High Court
recorded findings that the respondent-plaintiffs were ready and willing to perform their part of
contract, the fact that time was extended for eight years is to be kept in view while
considering the question whether discretion is to be exercised in favour of the respondent-
plaintiffs.”
12. As has been found earlier in this judgment, the defendants were held to have taken up
dishonest pleas and also held to have been in breach of a solemn agreement in which they
were to obtain the Urban Land Ceiling permission which, if not obtained, would, under the
agreement itself, not stand in the way of the specific performance of the agreement between
the parties. He who asks for equity must do equity. Given the conduct of the defendants in
this case, as contrasted with the conduct of the appellant who is ready and willing throughout
to perform its part of the bargain, we think this is a fit case in which the Division Bench 66
judgment should be set aside. As a result, the decree passed by the Single Judge is restored.
Since the appellant itself offered a sum of Rs.1.25 crores to the Division Bench, it must be
made to pay this amount to the respondents within a period of eight weeks from the date of
this
judgment-https://main.sci.gov.in/supremecourt/2007/18318/18318_2007_33_1501_24337_Ju
dgement_12-Oct-2020.pdf- FERRODOUS ESTATES (PVT.) LTD vs. P. GOPIRATHNAM
(DEAD) & ORS.
13. Where Plaintiff and seek relief- In Sardar Amarjeeth Singh Vs. Nandubai (1998(5) ALT
412 (DB), it is held that, increase in prices in urban areas may also be one of the
considerations in granting relief long after expiry of time limit though suit is filed within
period of limitation. In assessing question of readiness and willingness of the vendee to
perform his part of the contract, court can take into account long, unexplained silence and
inaction on the part of vendee. Continuous readiness and willingness on the part of vendee is
a conditional precedent to grant relief of specific performance.
14. Mullapudi Venkata Rayudu Vs. Smt. Kakarla Madhubala(2006 (5) ALT 30) it is held that,
when the plaintiff does not approach the court with true version, the plaintiff is not entitled
for specific performance. In the said case, the defendant lady entered into agreement of sale,
because of some problem from her brother and other kith and kin, some amount was paid as
earnest money on the date of agreement. Plaintiff alleged that a promissory note has been
executed towards balance of sale consideration and further pleaded that he discharged the
promissory note amount in instalments. But, the court disbelieved the promissory note and
discharge endorsements and payments receipts for want of proof with detailed reasons and
found that the plaintiff had not approached the court with true version and negatived the relief
of specific performance.