A) ABSTRACT / HEADNOTE

The judgment examines the contours of specific performance of contracts relating to immovable property, particularly where the vendor creates third-party interests after executing an agreement for sale. The dispute arose from an agreement dated 21 March 1984 for sale of 300 square yards of land for a total consideration of Rs. 75,000, out of which a substantial portion had already been paid. Subsequently, the vendor executed a registered sale deed in favour of a third party for 100 square yards of the same land. The vendee sought specific performance of the agreement.

The Supreme Court reaffirmed the settled principle that time is not of the essence in contracts for sale of immovable property unless expressly provided. It emphasized that readiness and willingness under Section 16(c) of the Specific Relief Act, 1963 must be assessed on evidence and conduct. The Court rejected the vendor’s plea that the agreement was conditional upon cancellation of an earlier agreement, holding that oral conditions cannot override a written contract.

The judgment provides authoritative guidance on partial specific performance under Section 12, holding that a vendor cannot frustrate a contract by transferring part of the property to a third party. It also clarifies the law on necessary parties, limitation under Article 54 of the Limitation Act, and the legal consequences of non-joinder. The Court upheld partial enforcement of the contract for 200 square yards, balancing equity, statutory mandate, and accrued third-party rights.

Keywords: Specific Performance; Partial Performance; Readiness and Willingness; Limitation; Necessary Party; Specific Relief Act, 1963

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGMENT

The litigation has its genesis in competing claims arising from successive transactions concerning the same immovable property. The vendor, after acquiring ownership over 300 square yards of land, entered into multiple agreements, culminating in conflicting claims of title and enforceability. The dispute illustrates a recurring problem in Indian property transactions where vendors, after receiving substantial consideration, attempt to defeat contractual obligations by creating third-party interests.

The vendee instituted a suit for specific performance, asserting continuous readiness and willingness to perform contractual obligations. Parallel proceedings were initiated by the third-party purchaser seeking injunction, and by the vendee seeking declaration of invalidity of the third-party sale deed. These suits were clubbed for convenience but retained independent identities.

The trial court decreed partial specific performance, limiting relief to 200 square yards, holding that the third-party purchaser’s rights over 100 square yards could not be disturbed due to limitation and procedural lapses. This approach was affirmed by the High Court.

Before the Supreme Court, the vendor contended that the agreement was conditional, indivisible, and incapable of partial enforcement. The vendee sought enforcement of the contract in entirety. The Court was thus called upon to interpret the scope of Sections 10 and 12 of the Specific Relief Act, the doctrine of readiness and willingness, and the consequences of non-joinder and limitation.

D) FACTS OF THE CASE

The vendor purchased 300 square yards of land by a registered sale deed dated 20 August 1982. Within days, she allegedly entered into an oral agreement with a third party for 100 square yards, which was later reduced into writing.

On 21 March 1984, the vendor executed a written agreement with the vendee for sale of the entire 300 square yards for Rs. 75,000. A sum of Rs. 40,000 was paid on the date of execution, and Rs. 5,000 was subsequently paid to the vendor’s husband against receipt. The agreement stipulated payment of the balance within 45 days.

The vendee tendered the remaining amount within the stipulated period, including by obtaining a demand draft dated 4 May 1984. The vendor refused acceptance. Instead, on 25 May 1984, the vendor executed a registered sale deed in favour of the third party for 100 square yards.

The vendee filed a suit for specific performance in 1984 but failed to implead the third party initially. The third party filed a separate suit for injunction. The vendee also filed a declaratory suit against the third party without impleading the vendor.

The trial court decreed partial specific performance for 200 square yards, reduced the consideration proportionately, dismissed the declaratory suit for non-joinder, and upheld third-party rights over 100 square yards. These findings were upheld by the High Court and later by the Supreme Court.

E) LEGAL ISSUES RAISED

i. Whether the vendee had proved continuous readiness and willingness to perform the agreement?
ii. Whether the agreement dated 21 March 1984 was conditional upon cancellation of an earlier agreement?
iii. Whether partial specific performance under Section 12 of the Specific Relief Act was permissible?
iv. Whether the third party was a necessary party to the suit for specific performance?
v. Whether the claim against the third party was barred by limitation?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for the vendor submitted that the agreement was a composite and indivisible contract and could not be enforced partially. It was contended that the vendee failed to pay the balance consideration within time, rendering the agreement unenforceable.

It was argued that the agreement was subject to an oral condition requiring the vendee to negotiate cancellation of the prior agreement with the third party. The vendor asserted that time was of the essence and that subsequent sale to the third party was lawful.

G) RESPONDENT’S ARGUMENTS

The counsels for the vendee contended that substantial consideration had already been paid and that the vendee had tendered the balance within time. It was argued that time is not of the essence in contracts for sale of immovable property.

The vendee denied existence of any conditional clause and emphasized that the vendor deliberately created third-party interests to defeat contractual obligations. Reliance was placed on statutory presumptions favouring specific performance.

H) JUDGMENT 

The Supreme Court upheld concurrent findings that the vendee was ready and willing to perform contractual obligations. The Court rejected the vendor’s plea of a conditional agreement, holding that a written contract cannot be varied by unsubstantiated oral assertions.

The Court reaffirmed that after the 2018 amendment to Section 10, specific performance is no longer discretionary but mandatory, subject to statutory exceptions. The vendor, having accepted a substantial portion of consideration, could not evade performance by transferring part of the property.

The Court applied Section 12 purposively and upheld partial specific performance for 200 square yards, holding that the vendor cannot take advantage of her own wrong. However, the rights of the third party were protected due to limitation and procedural lapses by the vendee.

a) RATIO DECIDENDI

The vendor cannot defeat an agreement for sale by transferring part of the property to a third party after accepting substantial consideration. Partial specific performance under Section 12 is permissible where complete performance is rendered impossible by the vendor’s own acts, provided equities are balanced and third-party rights accrued by limitation are protected.

b) OBITER DICTA

The Court observed that courts must adopt a purposive interpretation of the Specific Relief Act to prevent deliberate frustration of contracts. It cautioned against mechanical application of technical defences where equity demands enforcement.

c) GUIDELINES

i. Written contracts cannot be overridden by alleged oral conditions.
ii. Vendors cannot rely on self-created impossibility to avoid performance.
iii. Transferees of part property are necessary parties to suits for specific performance.
iv. Courts may grant partial specific performance with proportional adjustment of consideration.

I) CONCLUSION & COMMENTS

The judgment strengthens the enforceability of contracts for sale of immovable property and discourages vendors from acting in bad faith. It harmonizes statutory mandate with equitable principles, offering clarity on partial specific performance, limitation, and necessary parties. The ruling is significant for practitioners dealing with property disputes involving overlapping transactions and reinforces contractual sanctity in Indian civil jurisprudence.

J) REFERENCES

a) Important Cases Referred

• Durga Prasad v. Deep Chand, AIR 1954 SC 75

• Mahalaxmi Coop. Housing Society Ltd. v. Ashabhai Atmaram Patel, (2013) 4 SCC 404

• R.A. Oswal v. Deepak Jewellers, (1999) 6 SCC 40

• Dalip Singh v. Mehar Singh Rathee, (2004) 7 SCC 650

b) Important Statutes Referred

• Specific Relief Act, 1963

• Limitation Act, 1963

• Code of Civil Procedure, 1908

• Registration Act, 1908