In a significant ruling, the Supreme Court held that in the absence of a prayer for declaratory relief that the termination/cancellation of the agreement is wrong in law; the suit for specific performance is not maintainable. Resultantly the Agreement to sell cannot be specifically enforced.

The Apex Court also held that if the buyer has accepted the majority amount as advance consideration or refund of earnest money during the pendency of the civil suit then the suit for specific performance is not liable to be decreed.

Specific Performance Suit Not Maintainable In Absence Of Declaratory Relief

Accordingly, the Supreme Court allowed the appeal and set aside the impugned judgment as well as decree. Further, the Court declared the sale deed executed in favour of the Respondent no. 1-buyer in pursuance of the impugned judgments is null and void and directed the appellant to refund the balance sale consideration amount deposited by the respondent no.1 buyer in pursuance of the impugned judgment and decrees.

Facts of the Case

The Brief facts of the case that the dispute arose out of an unregistered Agreement to sell between the Respondent no.1 -buyer-plaintiff and the seller in respect of a property worth Rs 25 lakh Rupees in Patna. At the time of the execution of sale agreement, the respondent no.1- buyer paid Rs. 2, 51,000/- in case to the seller and issued three post dated cheques for the value of Rs. 7, 50,000.

The case of the respondent no.1 is that when she visited the subject property along with her husband on 11 February, 2008, the tenants of the seller created a scuffle and forced them to return.

On failure of the seller to execute the sale deed, the Respondent (buyer) filed a suit before the learned Trail Court, Patna for specific performance of the agreement to the sell dated 25th January, 2008 under the Specific Performance Act, 1963. Subsequently, the seller filed a written statement and claimed that her signatures on the sale agreement dated 25th January, 2008 were fraudulently obtained. It was further stated that the seller had issued a letter dated 7th May, 2008 cancelling the agreement to sell dated 25th January, 2008 and refunded 2.11 lakh through five drafts and returned two out of three post dated cheques.

The Trail Court framed the issues and a judgment and decree was passed in favour of the Respondent no.1 buyer. Aggrieved by this judgment and decree, the appellant was filed first appeal before the Patna High Court. The said appeal was dismissed by the Patna High Court.

Issues

Whether a suit for specific performance of an Agreement to sell is maintainable if the buyer had accepted the refund earnest money during the pendency of the civil suit?

Whether the buyer was 'readiness' and 'willingness' to perform the agreement to sell under the Specific performance Act, 1963?

Court’s Reasoning

The Court clarified that ‘readiness’ and ‘willingness’ under section 16 of Specific Relief Act are two different elements. It was also clarified that continuous readiness and willingness on part of the buyer from the date of execution of agreement to sell till the date of decree, is a condition precedent for grant of relief of specific performance.

The bench observed that the conduct should be such that it shows readiness and willingness. Consequently, the readiness and willingness of the buyer to sell the property at the time of institution of the suit loses its relevance, if the respondent no.1- buyer unable to prove that the readiness and willingness continued even during the pendency of the suit.

The Bench held, “Suppression of the material fact deprives the buyer from the equitable and discretionary relief of the specific performance. Since in the present case, that seller had issued a letter dated 7th May, 2008 cancelling the agreement to sell dated 25th January, 2008 before the filing of suit, the same constitutes a jurisdictional fact as till the said cancellation is set aside, the respondent buyer is not to get relief of specific performance”.

Conclusion

The Supreme Court concluded that the Respondent no.1 fail to seek the declaratory relief and also failed to disclose in the plaint that the seller had issued a cancellation letter dated 7th May, 2008 along with the demand draft.

Accordingly, the Supreme Court allowed the appeal and set aside the impugned judgment as well as decree and directed the appellant to refund the balance sale consideration amount deposited by the respondent no.1 buyer in pursuance of the impugned judgment and decrees.

Case Title: - Sangita Sinha vs. Bhawana Bhardwaj & Ors. 2025(2) Law Herald (SC) 1305

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