A) ABSTRACT / HEADNOTE

Vijay Prabhu v. S.T. Lajapathie & Ors., 1 S.C.R. 718 : 2025 INSC 52, considers the scope and exercise of judicial discretion under Section 12 of the Specific Relief Act, 1963, when a party seeks specific performance of only a part of an agreement of sale. The plaintiff sued for specific performance and possession of immovable property under an agreement dated 07.11.2005, alternatively claiming damages. Trial Court found the plaintiff not ready and willing to perform his obligations, rejected specific performance and ordered refund of earnest money with interest.

The High Court affirmed but examined whether the plaintiff could invoke Section 12(3) to obtain specific performance of a segregable portion, observing that Section 12(3) is discretionary, requires that the contract be capable of segregation and that the plaintiff must relinquish all claims to further performance and compensation. The Supreme Court dismissed the SLP, holding

(i) courts may not grant specific performance of part of a contract except under Section 12(2), (3) or (4);

(ii) Section 12(3)’s relief is discretionary and applies only where the contract permits segregation of rights;

(iii) a plaintiff in default and not ready and willing cannot invoke Section 12(3); and (iv) relinquishment of claims for remaining performance may be made at any stage of litigation. The Court directed refund of the earnest money deposit with accumulated interest.

Keywords: Specific performance; Section 12; ready and willing; partial performance; relinquishment; discretionary relief; segregation of contract rights.

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The dispute arises from an agreement dated 07.11.2005 under which the plaintiff sought specific performance and delivery of possession; alternatively damages of Rs. 60,00,000/- were claimed. The Trial Court found lack of readiness and willingness on the plaintiff’s part and directed return of the earnest money of Rs. 20,00,000/- with interest. On first appeal the High Court framed precise points about ready and willing, invocation of Section 12, and the discretionary equitable relief of partial specific performance. The High Court noted the plaintiff had sought damages alongside specific performance and therefore had not relinquished all claims; it held Section 12(3) could not be invoked where the agreement could not be compartmentalised and when the plaintiff had not paid the balance consideration.

The Supreme Court heard the SLP, considered statutory language and precedent, and clarified two central aspects: the circumstances in which Section 12(3) may be applied and whether relinquishment can be made for the first time on appeal. The Court analysed statutory phrases such as “unable to perform” and “considerable part”, emphasised the discretionary nature of relief under Section 12(3), and reaffirmed that a plaintiff in default cannot obtain the benefit of the sub-section. Finally the Court held relinquishment can be made at any stage of litigation and ordered refund of the earnest money deposit with accumulated interest.

D) FACTS OF THE CASE

The plaintiff entered into an agreement dated 07.11.2005 to purchase immovable property from the defendants and paid Rs. 20,00,000/- as earnest money. The suit was filed in 2008 for specific performance and delivery of possession; as an alternative, damages of Rs. 60,00,000/- with interest were claimed. The Trial Court, after framing issues, held that the plaintiff was not ready and willing to perform his obligations under the contract and that the plaintiff failed to plead or prove damages. Consequently, the Trial Court dismissed the specific performance claim and directed refund of the earnest money with 12% interest.

On appeal, the High Court revisited Section 12 and found that the plaintiff had not relinquished all claims—he simultaneously sought damages—and that the contract did not admit compartmentalisation to allow enforcement of only a segregable part. The High Court treated Section 12(3) as discretionary and held the plaintiff could not invoke it because he had not paid the outstanding consideration (allegedly Rs. 64,00,000/- remaining) and was in default. The plaintiff raised before the High Court, for the first time, the proposition of relinquishing remaining claims to seek benefit under Section 12(3).

The High Court adverted to precedents but decided the appeal against the plaintiff. The plaintiff moved SLP to the Supreme Court challenging the High Court’s application of Section 12 and its treatment of the relinquishment point. The deposit of Rs. 20,00,000/- had been placed in court as refund by the defendants; the Supreme Court ordered that amount with interest be returned to the plaintiff.

E) LEGAL ISSUES RAISED

i. Whether a plaintiff who is found not ready and willing can invoke Section 12(3) of the Specific Relief Act, 1963, to obtain specific performance of part of a contract?

ii. Whether Section 12(3) can be invoked where the contract is not capable of segregation into independently enforceable parts?

iii. Whether relinquishment of claim to further performance or compensation may be made for the first time at the appellate stage?

F) PETITIONER / APPELLANT’S ARGUMENTS

The learned Senior Counsel for the petitioner contended that the plaintiff was entitled to the benefit of Section 12(3) and that the High Court erred in rejecting partial specific performance. It was urged that the plaintiff could relinquish the claim to further performance and that the agreement or a portion thereof was capable of segregation and specific enforcement. The petitioner argued that denial of Section 12(3) on the ground that the plea was not taken at trial was unsustainable because relinquishment can be effected at any stage; further, the High Court should have exercised discretion to grant partial performance rather than dismissing specific relief entirely.

G) RESPONDENT’S ARGUMENTS

The respondents maintained the Trial Court’s and High Court’s findings that the plaintiff was in default and not ready and willing were correct. They argued that Section 12(3) could not apply because the plaintiff had not paid the balance consideration and had sought damages—demonstrating he had not relinquished claims to remaining performance or compensation. The respondents further contended that the agreement could not be compartmentalised; hence partial specific performance was infeasible.

H) RELATED LEGAL PROVISIONS 

i. Section 12, Specific Relief Act, 1963 — subsections (1)–(4), and Explanation defining unable to perform.

ii. Relevant precedent authorities cited in the judgment: Jaswinder Kaur v. Gurmeet Singh, (2017) 12 SCC 810; Kalyanpur Lime Works v. State of Bihar, AIR 1954 SC 165; Waryam Singh v. Gopi Chand, AIR 1930 Lah 34; Ram Niwas v. Smt. Omkari, AIR 1983 All 310.

I) JUDGMENT

The Supreme Court dismissed the SLP, upholding the factual findings below and clarifying legal principles under Section 12. The Court observed that Section 12(1) prohibits granting specific performance of part of a contract except as provided in subsections (2)–(4). Section 12(2) applies where inability to perform affects only a small proportion capable of monetary compensation. Section 12(3) addresses cases where the default leaves a considerable part unperformed or where the unperformed part does not admit of compensation; even then relief is not automatic.

The Court construed “unable to perform” to include deficiency in quantity, variance in quality, defective title, statutory prohibition or other causes and explained “considerable part” as something material in quantity or quality. The Court emphasised that Section 12(3) is discretionary and can be exercised only if the contract permits segregation of rights. Where the plaintiff is himself in default or not ready and willing, invocation of Section 12(3) is impermissible.

Applying these principles, and noting concurrent findings below that the plaintiff was not ready and willing and had not paid the balance consideration, the Court held the plaintiff could not claim relief under Section 12(3). On the procedural point, the Court relied on Kalyanpur Lime Works and Waryam Singh to hold relinquishment can be effected at any stage of litigation, and therefore the High Court was correct to consider the plea made on appeal; but the merits did not favour the plaintiff. The Court ordered refund of the earnest money deposited in Court with accrued interest.

a. RATIO DECIDENDI

The operative ratio is that Section 12(3) affords a discretionary remedy for partial specific performance only where :

(i) the party in default is unable to perform the whole by reasons outside his control;

(ii) the part left unperformed is segregable and not a considerable part in the sense of materiality;

(iii) the plaintiff seeking partial performance has paid or will pay the appropriate consideration and has relinquished all claims to further performance and to compensation.

A plaintiff who is in default or not ready and willing cannot avail of Section 12(3). Relinquishment of claims may be made at any stage of litigation but cannot convert a plaintiff-in-default into an entitled claimant under the sub-section.

b. OBITER DICTA

The Court reiterated doctrinal clarifications: the meaning of “unable to perform” and “considerable part”, and that ascertainability of monetary compensation is a decisive factor; if a reasonable monetary estimate is possible, Section 12(2) may apply instead. The Court also observed that the discretionary power under Section 12(3) must balance equities and the rights of both parties and must consider whether contractual rights can be practically segregated. These observations, while explanatory, guide future application but do not alter the outcome in the present facts.

c. GUIDELINES 

i. Section 12(1) is the general bar; subsections (2)–(4) are exceptions and must be strictly applied.
ii. Determine whether inability to perform arises from causes beyond defaulting party’s control (quantity, quality, title, statutory bar).
iii. Assess whether the unperformed part is a considerable part — materiality in quality or quantity.
iv. If monetary compensation can be reasonably ascertained, prefer compensation (Section 12(2)) unless segregation and equities favour partial specific performance.
v. Ensure the plaintiff has paid or will pay the appropriate consideration and has relinquished all claims to remaining performance and compensation before granting relief under Section 12(3).
vi. Relinquishment may be made at any stage of litigation, but courts must scrutinise genuineness and balance equities before exercising discretion.

J) CONCLUSION & COMMENTS

The decision gives a measured exposition of Section 12 by reconciling statutory text with equitable principles. It reinforces that partial specific performance is the exception and not the rule and that courts must refuse equitable relief where the claimant is in default or not ready and willing. The ruling emphasises segregability of contractual obligations as a threshold inquiry and clarifies that relinquishment of further claims can be effected on appeal a procedural liberalisation balanced by substantive scrutiny of default and payment of consideration.

For practitioners, the judgment underlines careful pleading: when seeking partial performance, plead and evidence readiness, payment of consideration or willingness to pay, and clear relinquishment of other claims; absent these, courts will decline discretionary partial decrees. The judgment also serves as a caution that seeking alternative remedies (e.g., damages) while simultaneously asking for partial specific performance undermines the relinquishment requirement under Section 12(3).

K) REFERENCES

a. Important Cases Referred

1. Vijay Prabhu v. S.T. Lajapathie & Ors., 1 S.C.R. 718 : 2025 INSC 52 (Supreme Court of India, Jan. 8, 2025).

2. Jaswinder Kaur (Now Deceased) through her Legal Representatives and Others v. Gurmeet Singh and Others, [2017] 5 SCR 430 : (2017) 12 SCC 810.

3. Kalyanpur Lime Works v. State of Bihar, AIR 1954 SC 165.

4. Waryam Singh v. Gopi Chand, AIR 1930 Lah 34.

5. Ram Niwas v. Smt. Omkari and Another, AIR 1983 All 310.

b. Important Statutes Referred

1. Specific Relief Act, 1963, Section 12 (subsections (1)–(4)).