Introduction:

In V.N.A.S. Chandran v. S. Venila and Others [2026 LiveLaw (SC) 75], the Supreme Court reaffirmed that a decree for specific performance is an equitable and discretionary remedy, not an automatic consequence of a valid agreement to sell. The Bench comprising Justice Prashant Kumar Mishra and Justice A.S. Anjaria allowed the appeals filed by the property owner and restored the trial court’s decision refusing specific performance while directing refund of the advance amount with interest.

The dispute arose from an agreement dated April 1, 2004, under which the appellant agreed to sell immovable property situated in Udhagamandalam for ₹2.25 crore. The purchasers paid ₹85 lakh as advance and later sought specific performance alleging that the seller failed to execute the sale deed. Although the trial court acknowledged payment of the advance, it declined to grant specific performance, holding that the purchasers had failed to establish continuous readiness and willingness to perform their contractual obligations. The Madras High Court reversed this finding and directed execution of the sale deed, prompting the seller to approach the Supreme Court.

The principal issue before the Supreme Court was whether the purchasers had continuously demonstrated readiness and willingness to perform their part of the contract, a mandatory requirement under the Specific Relief Act for obtaining specific performance.

Arguments of the Parties:

The appellant contended that the purchasers failed to satisfy the statutory requirement of continuous readiness and willingness throughout the contractual period and the litigation. It was argued that two cheques issued towards the sale consideration had been dishonoured due to insufficient funds, clearly indicating the absence of financial capacity. The appellant further submitted that the purchasers did not possess adequate funds when the suit was instituted and that the Memorandum of Understanding relied upon to establish financial resources neither proved receipt of money nor found mention in the legal notice or plaint. It was also argued that producing a demand draft of ₹1.40 crore during appellate proceedings in 2011 could not establish financial readiness from the date of the agreement in 2004.

The appellant further argued that the purchasers had adopted inconsistent positions by simultaneously pursuing a criminal complaint seeking refund of the advance amount while also insisting on specific performance before the civil court. Contradictory stands regarding assignment of contractual rights to a third party also reflected lack of bona fides. Considering that more than two decades had elapsed since the agreement, compelling execution of the sale deed would cause serious hardship and defeat the equitable nature of the relief.

The purchasers supported the High Court’s judgment, contending that they had always been willing to complete the transaction and that delays were attributable to the seller. They relied upon the demand draft produced before the High Court to demonstrate financial capability and argued that substantial advance consideration had already been paid. They maintained that the agreement remained enforceable and that the seller should be directed to honour the contractual obligation.

Court’s Judgment:

The Supreme Court allowed the appeals and restored the trial court’s decree refusing specific performance. The Court reiterated that readiness and willingness must exist continuously from the execution of the agreement until the passing of the decree. The Court observed that the burden lies on the plaintiff to establish consistent financial capacity and genuine intention to perform contractual obligations throughout the relevant period.

The Bench held that the High Court erred in relying upon the demand draft produced several years after the agreement. Availability of funds during appellate proceedings could not establish continuous readiness at the time when performance was contractually due or when the suit was instituted. The Court found that the purchasers failed to produce convincing evidence showing they possessed sufficient financial resources during the relevant period.

The Court attached significant importance to the dishonour of two cheques issued by the purchasers due to insufficient funds, observing that this clearly indicated lack of financial preparedness. It further noted that the purchasers sold their Chennai properties only in May 2006, whereas the suit had already been filed in September 2005, demonstrating that they lacked adequate resources when legal proceedings commenced.

The Bench also found that the Memorandum of Understanding relied upon by the purchasers did not establish actual availability of funds. Since it was neither referred to in the legal notice nor pleaded in the plaint, it could not be treated as reliable evidence of financial readiness.

Relying upon N.P. Thirugnanam v. Dr. R. Jagan Mohan Rao and Janardan Das v. Durga Prasad Agarwalla (2024), the Court reiterated that continuous readiness and willingness is a condition precedent for grant of specific performance. Courts must examine the plaintiff’s conduct throughout the period from execution of the agreement until the decree.

The Supreme Court further held that equitable relief may be denied where the conduct of the plaintiff lacks consistency. The purchasers had simultaneously pursued refund of the advance through criminal proceedings while continuing to seek specific performance in the civil suit. Such inconsistent conduct weakened their claim for equitable relief.

Another important consideration was the extraordinary passage of time. Referring to Saradamani Kandappan, Nanjappan, and Kamal Kumar, the Court observed that more than twenty years had passed since execution of the agreement. During this period, one purchaser had died and the seller had reached an advanced age. Compelling transfer of valuable immovable property after such a prolonged lapse would be inequitable and contrary to the discretionary nature of specific performance.

Accordingly, the Supreme Court restored the trial court’s decree directing refund of ₹85 lakh with interest. It also permitted the purchasers to withdraw the ₹1.40 crore deposited pursuant to the High Court’s judgment along with accrued interest. The decision reinforces that specific performance remains an equitable remedy dependent not merely upon the existence of a valid contract but also upon the plaintiff’s continuous readiness, willingness, and overall conduct.