Readiness and Willingness Must Be Proved from Agreement Date

Source: Supreme Court

Why in News? 

A Bench comprising Justice Prashant Kumar Mishra and Justice NV Anjaria in the matter of Mohammed Khaleel (D) Through LRs & Ors. v. Jayamma (2026) dismissed an appeal challenging the Karnataka High Court's reversal of a trial court decree for specific performance, holding that the plaintiff had failed to establish continuous readiness and willingness to perform the agreement to sell from the relevant date.  

• The Court further held that unexplained delay in approaching the court, even if within the limitation period, is a relevant consideration while granting the discretionary relief of specific performance.

What was the Background of Mohammed Khaleel (D) Through LRs & Ors. v. Jayamma (2026) Case? 

• The dispute arose from an agreement to sell dated December 20, 1990, executed between the Appellant and Respondent in respect of a vacant site in Mysore for a total sale consideration of Rs. 3 lakh. An earnest amount of Rs. 25,000 was paid at the time of execution, with the balance of Rs. 2.75 lakh to be paid at the time of registration.  
• The agreement stipulated a four-month period for completion of the transaction. 
• The defendant rescinded the agreement, following which the plaintiff instituted a suit for specific performance in December 1993, nearly two years and nine months after the rescission.  
• The trial court decreed the suit in 2002. The Karnataka High Court, however, reversed the decree in 2009, holding that the plaintiff had failed to establish continuous readiness and willingness to perform his contractual obligations. This order was challenged before the Supreme Court. 
• Before the Supreme Court, the appellants argued that they possessed sufficient financial capacity to complete the transaction, relying upon four Fixed Deposit Receipts (FDRs) worth Rs. 70,000 each, aggregating Rs. 2.80 lakh.

What were the Court's Observations? 

• On financial readiness to be proved with reference to the relevant period: 
  The Court held that while it was not necessary for the plaintiff to physically deposit the consideration amount before the court, reliable and acceptable evidence must be placed on record to show possession of sufficient funds at the relevant time — that is, from the date of the agreement until the filing of the suit. It observed that there was no material to show that the plaintiff had the balance sale consideration available either at the time of execution of the agreement, within the stipulated four-month period for performance, or even at the time of filing of the suit in 1993. 
• On rejection of the FDRs as proof of financial capacity: 
  The Court noted that the four FDRs relied upon by the appellants were dated October 4, 1999, November 22, 1999, April 3, 2001, and August 23, 2001 — all created several years after the institution of the suit on December 20, 1993. It accordingly held that these FDRs could not establish the appellants' financial readiness during the relevant period. 
• On delay in filing the suit: 
  The Court held that the unexplained delay of nearly two years and nine months in filing the suit after the defendant had rescinded the agreement was itself reflective of the plaintiff's lack of continuous readiness and willingness to perform his part of the contract. The Court observed that although a suit filed within the limitation period is not barred, delay without explanation remains a relevant consideration while granting the equitable and discretionary relief of specific performance, and such conduct disentitles a plaintiff from the said relief.

What is Specific Performance? 

• Specific performance constitutes an equitable remedy granted by a court to uphold the contractual commitments among the parties. 
• Unlike a claim for damages, which involves compensation for non-fulfilment of contractual stipulations, specific performance operates as a remedy that enforces the terms agreed between the parties. 
• It is governed by the Specific Relief Act, 1963 (SRA). 
• Section 10 of SRA deals with specific performance of contracts. It states that:  
  • The specific performance of a contract shall be enforced by the court subject to the provisions contained in sub-section (2) of Section 11, Section 14, and Section 16. 
• The Supreme Court in Katta Sujatha Reddy v. Siddamsetty Infra Projects (P) Ltd. (2023) held that the relief of specific performance can only be granted when the party claiming such relief shows its readiness and willingness to perform its obligations under the contract.

What are the Landmark Judgments Related to Specific Performance? 

• His Holiness Acharya Swamy Ganeshdasji v. Seetharam Apar (1996):  
  • The Supreme Court explained the distinction between 'readiness' and 'willingness'. 
  • 'Readiness' refers to the plaintiff's financial capacity and ability to perform the contract, while 'willingness' relates to the plaintiff's conduct and intention to fulfill the contractual obligations. 
• Man Kaur v. Hartar Singh Sangha (2010):  
  • The Supreme Court held that even if the defendant has committed a breach of contract, the plaintiff cannot obtain a decree for specific performance if the plaintiff fails to aver and prove continuous readiness and willingness to perform their part of the contractual obligations. 
• Saradamani Kandappan v. S. Rajalakshmi (2011):  
  • The Supreme Court observed that with the steep rise in real estate prices, it becomes inequitable to grant specific performance if the purchaser delays payment without justification from the vendor's side. 
  • Courts are required to apply greater scrutiny in such cases. 
• Rajesh Kumar v. Anand Kumar (2024):  
  • This judgment dealt with the evidentiary value of testimony given by a power of attorney holder. 
  • The Court held that a power of attorney holder cannot become a witness on behalf of the party and depose to prove that party's readiness and willingness to perform the contract.