Source: Supreme Court  

Why in News? 

Recently, the bench of Justice Dipankar Datta and Justice Manmohan held that a suit for specific performance of a cancelled agreement to sell is not maintainable without seeking declaratory relief challenging the cancellation. 

•  The Supreme Court held this in the matter of Sangita Sinha v. Bhawana Bhardwaj and Ors. (2025). 

What was the Background of Sangita Sinha v. Bhawana Bhardwaj and Ors. (2025) Case? 

• Late Kushum Kumari (original defendant/seller) was allotted the subject property by the People's Cooperative House Construction Society Limited vide a registered sub-lease dated 2nd April 1968. 
• On 25th January 2008, an unregistered Agreement to Sell was executed between Bhawana Bhardwaj (Respondent No.1/buyer) and the seller for a total sale consideration of Rs. 25,00,000/-. 
• At the time of execution of the Agreement to Sell, the buyer paid Rs. 2,51,000/- in cash and issued three post-dated cheques worth Rs. 7,50,000/-. 
• On 7th February 2008, the seller wrote a letter to the buyer cancelling the Agreement to Sell, enclosing five demand drafts totaling Rs. 2,11,000/- and returning two of the three post-dated cheques. 
• The buyer subsequently filed Title Suit No. TS/176/2008 in the Trial Court, Sub Judge-IV, Patna, seeking specific performance of the Agreement to Sell. 
• The seller contested the suit by claiming her signatures had been fraudulently obtained on the Agreement to Sell, and that she had filed a police complaint regarding the same on 6th February 2008. 
• Upon the demise of the seller, Sangita Sinha (appellant) was impleaded as defendant no. 3, as the subject property had been bequeathed to her through a Will dated 23rd September 2002. 
• The buyer admittedly encashed the five demand drafts in July 2008, after filing the suit on 5th May 2008. 
• The Trial Court decreed the suit in favor of the buyer on 27th April 2018, which was upheld by the Patna High Court on 9th May 2024. 
• The appellant challenged these judgments before the Supreme Court of India. 

What were the Court’s Observations? 

• The Court observed that the buyer's act of encashing the demand drafts established beyond doubt that she was not willing to perform her part of the Agreement to Sell and proceed with execution of the sale deed. 
• The Court determined that the conduct of the buyer in encashing the demand drafts was acceptance of the seller's repudiation, effectively cancelling the Agreement to Sell. 
• The Court held that the buyer should have sought a declaratory relief that the cancellation was bad in law, as existence of a valid agreement is sine qua non for grant of relief of specific performance. 
• The Court noted that continuous readiness and willingness on the part of the buyer from the date of execution of Agreement to Sell till the date of the decree is a condition precedent for grant of relief of specific performance. 
• The Court observed that the buyer's failure to disclose in the plaint that the seller had issued the cancellation letter enclosing demand drafts amounted to suppression of material fact, disentitling her from the discretionary relief of specific performance. 
• The Court determined that the appellant, being a beneficiary under the Will, had the locus standi to file the appeal as she was a necessary and interested party to the lis. 
• The Court concluded that the Agreement to Sell could not be specifically enforced due to the buyer's lack of continuous willingness to perform the contract and suppression of material facts. 

What is Section 16(c) of the Specific Relief Act, 1963 (SRA)? 

• Section 16(c) states that specific performance cannot be enforced in favor of a person "who fails to prove that he has performed or has always been ready and willing to perform the essential terms of the contract which are to be performed by him, other than terms the performance of which has been prevented or waived by the defendant." 

Key Elements: 

• Burden of Proof: The plaintiff must prove their performance or readiness to perform. 
• Essential Terms Only: This applies only to essential terms of the contract, not minor ones. 
• Exceptions: The plaintiff doesn't need to prove performance of terms that were:  
  • Prevented by the defendant 
  • Waived by the defendant 
• Money Payments: According to Explanation (i), actual tender of money is not essential unless directed by the court. 
• True Construction: Explanation (ii) requires the plaintiff to prove performance or readiness according to the "true construction" of the contract. 
• Section 16(c) embodies the equitable principle that "one who seeks equity must do equity."  
• It places the burden on the plaintiff to demonstrate that they have either performed or have continuously been ready and willing to perform their contractual obligations before they can seek the equitable remedy of specific performance.  
• This provision ensures that only parties who have acted in good faith and fulfilled their own obligations can compel the other party to specifically perform the contract.  
• The section recognizes practical exceptions where the defendant has prevented performance or where money payment is involved, balancing strict compliance with practical realities of contractual relationships.