P. Daivasigamani Vs S. Sambandan (Supreme Court of India): Specific Performance of Property Sale Agreement Upheld

Case Background and Core Dispute

This Supreme Court ruling arose from a challenge to the judgment dated 15.06.2010 delivered by the High Court of Judicature at Madras in Appeal Suit No. 196 of 2002. The High Court had set aside the decree of the Subordinate Judge, Poonamallee passed in O.S. 212 of 1993, replacing it with a decree granting specific performance of an agreement for sale dated 05.10.1989, along with a permanent injunction in favour of the plaintiff, S. Sambandan.

The original plaintiff had approached the Trial Court seeking enforcement of a sale agreement, with an alternative prayer for refund of earnest money along with interest, and a further prayer to restrain the defendant from alienating the suit property to any third party. The Trial Court had declined specific performance and limited relief to recovery of the advance with interest at 12% per annum.

Facts of the Case

P. Daivasigamani held ownership over 1 acre of wetland out of a total extent of 1.80 acres comprised in Survey Nos. 287 and 288, situated at No. 85, Ayanambakkam, District Ambattur. He entered into an agreement to sell this land to S. Sambandan on 05.10.1989 for a total consideration of Rs. 6,50,000/-.

At the time of execution of the agreement:

  • A sum of Rs. 50,000/- was paid as earnest money
  • The period stipulated for completion of the sale transaction was six months

Steps Taken by the Plaintiff

Despite the contractual timeline, the defendant failed to respond to repeated efforts made by the plaintiff:

  1. A registered letter dated 17.03.1990 was dispatched calling upon the defendant to execute a power of attorney and conclude the transaction — no response was received
  2. A lawyer's notice dated 26.03.1990 was sent — it was returned bearing the endorsement "refused"
  3. Public notices were published in the Tamil daily "Dhina Thanthi" on 02.05.1990 and in the English daily "Indian Express" on 06.05.1990

The suit for specific performance was ultimately instituted on 26.03.1993.

Defendant's Position

The defendant admitted execution of the agreement but:

  • Denied receipt of the Rs. 50,000/- earnest money
  • Disputed the plaintiff's readiness and willingness to perform
  • Denied having received either of the notices issued by the plaintiff

Trial Court's Findings

The Trial Court framed seven issues. The plaintiff examined himself as PW-1 and produced documentary evidence marked as Ex. A1 to A7. The defendant entered the witness box as DW-1 but adduced no documentary evidence.

The Trial Court:

  • Accepted that Rs. 50,000/- had been paid as earnest money
  • Found that the balance consideration of Rs. 6,00,000/- had not been deposited at the time of filing the suit
  • Concluded that the plaintiff had not established adequate financial capacity to pay the balance within the stipulated period
  • Held that readiness and willingness had not been proved
  • Granted only refund of Rs. 50,000/- with interest at 12% per annum from the date of the agreement until realisation

High Court's Reversal

The High Court reversed the Trial Court's findings and observed:

"As the appellant/plaintiff has made clear averments to the effect that he was and has been ready and willing to pay the balance consideration and get the sale deed registered at his cost, there cannot be any inference against the readiness and willingness, especially in the absence of evidence adduced by the respondent/defendant to the effect that any call made by the respondent/defendant for accepting performance was not responded by the appellant/plaintiff. Therefore, this Court comes to the conclusion that the finding of the Court below to the effect that the appellant/plaintiff had not proved his continued readiness and willingness to perform his part of the obligations under the agreement is not based on sound reasoning and in fact it is perverse finding, which deserves interference by this Court. Accordingly, the said finding of the trial court regarding Issue No. 4 framed in the suit is set aside and reversed. It is hereby held that the appellant/plaintiff has complied with the requirements of Section 16(c) of the Specific Relief Act by making a specific pleading regarding his readiness and willingness and proving the same by reliable evidence."

Arguments Before the Supreme Court

Appellant's Contentions

  • The suit was filed more than three years after the agreement and was barred by limitation
  • Time was the essence of the contract, and the plaintiff had forfeited his right by failing to perform within the stipulated period
  • No explanation was offered for the delay in filing the suit
  • The plaintiff was required not merely to plead but to prove financial capacity through documentary evidence such as bank statements
  • The balance sale consideration of Rs. 6,00,000/- was never deposited in court at the time of filing the suit

Respondent's Contentions