Source: Karnataka High Court 

Why in News? 

A bench of Justice Krishna S Dixit and Justice Ramchandra D Huddar, held that for obtaining a decree of specific performance, the plaintiff must prove their continuous readiness and willingness to perform their part of the contract as required under Section 16(c) of the Specific Relief Act, 1963 (SRA). 

• The Karnataka High Court made observations in the case of Lakkamma & Others v. Jayamma. 

What is the Background of Case? 

• The defendants (appellants) had agreed to sell a property to the plaintiff (respondent) for Rs. 17 lakhs through an agreement dated 2nd August 2007. 
• The plaintiff paid Rs. 50,000 as advance on the date of the agreement and another Rs. 50,000 on 10th September 2007 as demanded by the defendants. 
• The agreement stipulated that the defendants would execute the sale deed within 6 months after getting the revenue records transferred in their names. 
• The plaintiff filed a suit seeking specific performance of the agreement as the defendants failed to execute the sale deed. 
• The trial court decreed the suit in favor of the plaintiff directing the defendants to execute the sale deed. 
• The defendants appealed against this judgment. 

What were the Court’s Observations? 

• The High Court allowed the appeal by the defendants and set aside the trial court's judgment decreeing specific performance in favor of the plaintiff. 
• The court held that the plaintiff failed to prove her readiness and willingness to perform her part of the contract as required under Section 16(c) of the SRA. 
• However, the court granted a decree directing refund of the total earnest money of Rs. 1 lakh (Rs. 50,000 + Rs. 50,000) paid by the plaintiff along with interest at 12% p.a. from the respective dates of payment till realization. 
• The court also allowed the plaintiff to withdraw the Rs. 16 lakhs deposited by her before the trial court, along with any interest accrued on that amount. If no interest accrued, the defendants were directed to pay interest at 12% p.a. on Rs. 16 lakhs from the date of deposit till realization. 

What is the Law Related to Specific Performance?  

• Specific performance constitutes an equitable remedy granted by a court to uphold the contractual commitments among the parties. 
• Unlike a claim of damages, which involves compensation for not fulfilling the 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 the specific performance in respect 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 the case of Katta Sujatha Reddy v. Siddamsetty Infra Projects (P) Ltd. (2023) held that the relief of specific performance of a contract 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 difference between 'readiness' and 'willingness' in this judgment.  
  • '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): 
  • In this case, the Supreme Court held that even if the defendant has committed breach of contract, the plaintiff cannot obtain a decree for specific performance if the plaintiff fails to aver and prove their continuous readiness and willingness to perform their part of the contractual obligations. 
• Saradamani Kandappan v. S.Rajalakshmi (2011): 
  • In this important judgment, 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.  
  • The courts need to apply greater scrutiny in such cases. 
• Rajesh Kumar v. Anand Kumar (2024) 
  • This recent Supreme Court judgment dealt with the evidentiary value of the testimony given by a power of attorney holder.  
  • It 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. 

 What is Section 16 of Specific Relief Act, 1963? 

• Eligibility for Compensation  
  • Specific performance of a contract cannot be enforced in favor of a person who would not be entitled to recover compensation for its breach. 
• Incapability, Violation, Fraud, or Subversion  
  • Specific performance cannot be enforced for a person who: 
    • Has become incapable of performing the contract's essential terms 
    • Violates any essential term of the contract that remains to be performed by them 
    • Acts in fraud of the contract 
    • Willfully acts at variance with or in subversion of the relationship intended by the contract 
• Averment and Proof of Performance  
  • Specific performance cannot be enforced for a person who fails to: 
    • Aver (assert) that they have performed or have always been ready and willing to perform the essential terms of the contract required from them. 
    • Prove the above, except for terms whose performance has been prevented or waived by the defendant. 
• Explanation 
  • For contracts involving payment of money, the plaintiff is not required to actually tender (offer) or deposit the money in court unless directed by the court. 
  • The plaintiff must aver (assert) performance of or readiness and willingness to perform the contract according to its true construction (interpretation).