Telangana High Court
Yogasai Health Resorts Limited, … vs Smt. S.Padmavathi, Hyderabad on 22 April, 2026
Author: K.Lakshman
Bench: K.Lakshman
IN THE HIGH COURT FOR THE STATE OF TELANGANA
AT HYDERABAD
HON'BLE SRI JUSTICE K.LAKSHMAN
AND
HON'BLE JUSTICE B.R.MADHUSUDHAN RAO
APPEAL SUIT No.60 OF 2008
Between:
M/s Yogasai Health Resorts Limited .... Appellant
Vs.
Smt. S.Padmavathi .... Respondent
DATE OF COMMON ORDER PASSED: 22.04.2026
SUBMITTED FOR APPROVAL.
THE HON'BLE SRI JUSTICE K.LAKSHMAN
1 Whether Reporters of Local newspapers may be
allowed to see the Judgment? Yes/No
2 Whether the copies of judgment may be marked
to Law Reporters/Journals Yes/No
3 Whether His Lordship wish to see the fair copy
of the Judgment? Yes/No
_________________________
JUSTICE K. LAKSHMAN
2
IN THE HIGH COURT FOR THE STATE OF TELANGANA
AT: HYDERABAD
CORAM:
* HON'BLE SRI JUSTICE K.LAKSHMAN
AND
HON'BLE JUSTICE B.R.MADHUSUDHAN RAO
+ APPEAL SUIT No.60 OF 2008
% Delivered on: 22.04.2026
Between:
# M/s Yogasai Health Resorts Limited .... Appellant
Vs.
$ Smt. S.Padmavathi .... Respondent
! For Appellant Mr. Vikram Poosarla, learned senior counsel
representing Mr. Kuber Kaushik, learned
counsel.
^ For Respondent Mr. A. Venkatesh, learned senior counsel
representing Mr. Pramod Malgi, learned
counsel for the plaintiff
<Gist
> Head Note
? Cases Referred
1. (2013) 15 SCC 27
2. AIR 2025 SC 1806
3. 2025 SCC OnLine SC 2300
4. 2025 INSC 1298
5. AIR 2017 SC 1236
6. (1993) 1 SCC 519
7. (2011) 12 SCC 18
8. 2025 SCC OnLine SC 1014
9. (1988) 2 SCC 488
3
10. (2010) 10 SCC 512
11. 1995 5 SCC 115
12. (2015) SCC OnLine Kar. 6141
13. (2025) 2 SCC 513
14. (2015) 8 SCC 695
15. 2024 INSC 927
16. (2015) 1 SCC 705
17. (1999) 6 SCC 337
18. 1970 (3) SCC 140
19. (2021) 17 SCC 705
20. AIR 2000 SCC 2408
21. (2019) 6 SCC 233
22. (2020) SCC OnLine Del. 481
23. (2004) 8 SCC 614
24. (2008) 14 SCC 517
25. (2023) 11 SCC 775
26. (2015) 1 SCC 587
27. (1979) 4 SCC 393
4
IN THE HIGH COURT FOR THE STATE OF TELANGANA
AT: HYDERABAD
HON'BLE SRI JUSTICE K. LAKSHMAN
AND
HON'BLE JUSTICE B.R.MADHUSUDHAN RAO
APPEAL SUIT No. 60 OF 2008
Date:22-04-2026
Between:
M/S Yogasai Health Resorts Limited. Appellant
And
Smt. S. Padmavathi ... Plaintiff
This Court passed the following:-
JUDGEMENT
Heard Mr. Vikram Poosarla, learned senior counsel representing
Mr. Kuber Kaushik, learned counsel for the Defendant and
Mr. A. Venkatesh, learned senior counsel representing Mr. Pramod
Malgi, learned counsel for the plaintiff.
2. The present Appeal Suit is filed assailing the judgment and
decree passed in O.S. No.14 of 2005 by the learned Principal District
5
and Sessions Judge, Medak at Sanga Reddy. The suit was instituted for
specific performance of an Agreement of Sale dated 23.01.2003 in
respect of agricultural land admeasuring Ac.18-31 guntas situated in
Survey Nos. 478/AA, 478/A, 478/E, 478/EE and 479/A at Chitkul
Village, Patancheru Mandal, Medak District, (for short, ‘suit schedule
property’).
(for sake of convenience, the parties hereinafter are referred to as
defendant and plaintiff)
3. Plaintiff has filed a suit in O.S.No.14 of 2005 against the
defendant for specific performance of agreement of sale dated
23.01.2003 contending as follows:-
i. Land in Sy.No.478 of Chitkur Village belongs to plaintiff
and land in Sy.No.479 of the very same village belongs to
Smt. Hamsaveni, w/o Reddapa Reddy and three others.
ii. M/s. Yoga Sai Health Resorts Limited (previously known
as RR Heterocyclics Limited, purchased the suit schedule
property under registered sale deeds bearing document
6Nos.1173 of 1996 dated 04.03.1996 and 1281 of 1996 dated
08.03.1996.
iii. Thereafter, the name M/s RR Heterocyclics Limited, is
changed as M/s Yoga Sai Health Resorts Limited.
iv. The said change of name was approved by Registrar of
Companies on 11.06.2002.
v. The defendant approached the plaintiff and offered to sell
the suit schedule property. Plaintiff agreed to purchase the
same for a total sale consideration of Rs.37,55,000/- and
Defendant agreed for the same.
vi. The Board of Directors of the defendant company has
passed a resolution dated 15.01.2003 authorizing its
Director to sell the suit schedule property, receive sale
consideration etc.
vii. Both the defendant and the plaintiff have entered into an
agreement of sale dated 23.01.2003 on the specific terms
and conditions agreed thereon as per which the total sale
consideration agreed was Rs.37,55,000/-.
7
viii. Plaintiff has paid an amount of Rs.2,00,000/- to the
defendant towards part sale consideration and defendant
having received the said advance sale consideration, issued
receipt.
ix. Possession of the suit schedule property was also delivered
in favour of the plaintiff.
x. Plaintiff is in possession of the suit schedule property.
xi. Plaintiff agreed to pay balance sale consideration of
Rs.35,55,000/- in three installments on the dates and on
receipt of the same, defendant shall execute a registered
sale deed in favour of the plaintiff.
xii. Plaintiff requested the defendant to receive first installment
of amount on 28.02.2008. Defendant requested the plaintiff
to wait for some time as the name of the M/s Yoga Sai
Health Resorts Limited is not entered into revenue records.
Mutation was not effected.
8
xiii. Defendant has issued a notice dated 21.03.2003 stating that
first installment was not paid and therefore, agreement of
sale dated 23.01.2003 is cancelled.
xiv. On receipt of the said notice, plaintiff approached the
defendant to receive first installment amount of
Rs.7,40,000/- on 02.04.2003, but the defendant informed
her that he will receive the said amount along with second
installment.
xv. On 31.05.2003 and on 31.08.2003, plaintiff approached the
defendant with a request to receive the balance sale
consideration and execute a registered sale deed in her
favour as agreed in the agreement of sale dated 23.01.2003.
xvi. Thus, plaintiff was always ready with balance sale
consideration to pay to the defendant.
xvii. Defendant informed the plaintiff that the name of the M/s
Yoga Sai Health Resorts is not entered in the revenue
records, mutation was not effected, pattadar passbooks and
title deeds are not issued, therefore, it is not in a position to
9
receive balance sale consideration and execute registered
sale deed in favour of the plaintiff.
xviii. Plaintiff believed the said version.
xix. Defendant cancelled the agreement of sale vide notice dated
21.03.2003.
xx. Plaintiff came to know that defendant is trying to alienate
the property to third parties keeping the plaintiff in dark.
xxi. Plaintiff got information on 20.05.2005 that defendant
entered into an agreement of sale to sell the suit schedule
property to Sri V.Sudhakar, Paladugu Venkat Rao, and
Khaja Rajasekhar and got issued a telegraphic notice to the
proposed purchasers on 24.05.2005.
xxii. Plaintiff also issued a publication in Eenadu Telugu Daily
newspaper in Ameerpet, Edition of Hyderabad on
25.05.2005.
xxiii. Thus, plaintiff expressed its readiness and willingness to
perform her part of contract. It is the defendant which
10
postponed the same with a malafide intention for wrongful
gains.
4. With the said contentions, plaintiff filed the aforesaid suit
seeking specific performance of agreement of sale, dated 23.01.2003.
5. On the other hand, defendant filed written statement contending
as follows:-
i. Purchase of suit schedule property from the plaintiff and
others has been admitted and that it has been in
possession of the suit schedule property since the date of
purchase.
ii. The defendant company was originally incorporated
under the name of “RR HetroCyclics Limited” and
subsequently changed its name to M/s YogaSai Health
Resorts Limited with the approval of Registrar of
Companies, dated 11.06.2002.
iii. Defendant company purchased portions of the suit
schedule property in its former name M/s RR
11Hetrocyclics Limited. Portion of the suit land was
purchased under registered sale deed bearing document
No.4952 of 2002, dated 08.08.2002 in the name of M/s
Yoga Sai Health Resorts Limited.
iv. It is the absolute owner and possessor of the suit
schedule property.
v. For buying alternative site, which would be used for
more beneficial for its corporate objectives, defendant
offered to sell the suit schedule property for a total sale
consideration of Rs. 37,55,000/- to plaintiff and the
Plaintiff agreed to purchase the same.
vi. An agreement of sale dated 23.01.2003 was entered and
plaintiff had paid an amount of Rs.2,00,000/- towards
advance sale consideration on 23.01.2003. Plaintiff
agreed to pay the balance sale consideration of
Rs.35,55,000/- in three installments.
vii. Time is essence of contract as per clause 2 of the
agreement of sale.
12
viii. Defendant has furnished the Photostat copies of sale
deeds, link documents etc., to enable the plaintiff for
verification of the documents and title of the suit
schedule property.
ix. Plaintiff failed to pay first installment of Rs.7,40,000/-
on 28.02.2003 as agreed.
x. Defendant has cautioned the plaintiff before the
stipulated time of first installment to pay the first
installment as the time is the essence of contract.
xi. In spite of number of personal and telephonic
conversations, plaintiff failed to perform her part of
agreement and willfully defaulted.
xii. Defendant has rescinded the agreement dated
23.01.2003 by sending a registered notice with
acknowledgement due dated 21.03.2003 as null and void
and forfeited the advance sale consideration. .
xiii. Reasons for rescission were mentioned in the said notice
in detail.
13
xiv. Despite receipt of the said notice on 23.02.2003,
plaintiff did not care the same and did not issue any
reply.
xv. Plaintiff never came to the suit schedule property.
xvi. Plaintiff failed to adhere to the schedule mentioned in
the agreement of sale for payment of balance sale
consideration.
xvii. Plaintiff failed to perform her part of contract at material
time and was never ready and willing to carry out her
part of agreement on material time. Plaintiff did not
have requisite money at her disposal for completing the
transaction. Plaintiff ahs no financial capacity to pay
even first installment.
xviii. There are laches on the part of the plaintiff and
therefore, she is not entitled for discretionary relief of
specific performance.
xix. Defendant has been in exclusive possession and
enjoyment of the suit schedule property and it has got
14
survey of the suit land. There is increase of land value
within the vicinity of the suit schedule property.
Therefore, plaintiff filed the present suit for specific
performance of agreement of sale.
xx. The agreement of sale dated 23.01.2003 is insufficiently
stamped and it cannot be received as evidence for any
purpose as per Section 35 of the Indian Stamp Act,
1899.
xxi. Agreement of sale dated 23.01.2003 is not registered as
required under Section 17(G) of the A.P.Amendment of
Registration Act, and as such it cannot be received as
evidence.
xxii. With the said contentions defendant sought to dismiss
the said suit.
6. Basing on the said pleadings, learned trial court framed and
restructured the following issues:-
i. Whether the plaintiff was ready and willing to carry out her part of
the contract within the stipulated time?
15
ii. Whether time was the essence of the contract?
iii. Whether the plaintiff is not in possession of the suit property in
pursuance of the Agreement of Sale?
iv. To what relief?
Subsequently, during the course of the trial, the learned Trial Court
observed that Issue No.3 relating to possession was more relevant in a
suit for injunction and was not germane to the principal relief of specific
performance sought in the present suit. The Court therefore considered it
appropriate to restructure the issues for proper adjudication of the
dispute. Accordingly, the issues were restructured and the following
issues were framed for determination:
i. Whether the plaintiff is entitled to the relief prayed for?
ii. Whether time was the essence of the contract and whether the
cancellation of the agreement is valid and binding?
iii. Whether the plaintiff was ready and willing to perform her part of the
contract within the stipulated time?
iv. To what relief?
7. These issues formed the basis for consideration of the evidence
and determination of the rights of the parties by the Trial Court.
16
8. Plaintiff examined herself as P.W.1 and her husband as P.W.2
and exhibited A.1 to A.8 documents in support of her claim.
9. Whereas, defendant examined its Director as D.W.1 and
exhibited Ex.B.1 to B.11.
10. On consideration of the aforesaid evidence both oral and
documentary, learned trial court decreed the suit with costs directing the
defendant to execute and register sale deed in favour of the plaintiff in
respect of the suit land after receiving balance sale consideration of
Rs.35,55,000/- lying in the deposit, within a period of three months from
the date of the decree. Learned trial Court further held that in the event
of the defendant failing to execute and register sale deed, plaintiff is
entitled to get the registration of the sale deed through the Court and the
plaintiff is liable to pay the stamp duty and registration fee for
registration either by the defendant or through Court.
11. Challenging the said judgment and decree, defendant preferred
the present appeal.
17
12. CONTENTIONS OF DEFENDANT:-
i. The Trial Court erred in granting the relief of specific
performance without properly appreciating the terms and
conditions contained in the Agreement of Sale dated 23.01.2003,
particularly the clause stipulating payment of the balance sale
consideration in installments within specified dates.
ii. The Trial Court failed to appreciate that the plaintiff had
admittedly not paid the first installment amount on the stipulated
date, which constituted breach of the essential terms of the
contract.
iii. The Trial Court ought to have held that time is essence of the
contract, in view of the clear stipulation in the agreement
prescribing specific dates for payment of installments.
iv. The Trial Court failed to properly appreciate the evidence on
record which, according to the defendant, demonstrated that the
plaintiff had not established readiness and willingness to perform
her part of the contract within the time stipulated under the
agreement.
18
v. The Trial Court did not properly consider the admissions elicited
in the cross-examination of the plaintiff (P.W.1) and P.W.2,
particularly with regard to the absence of documentary proof
showing availability of funds or financial capacity of the plaintiff
to complete the transaction.
vi. The Trial Court failed to give due weight to the fact that the
defendant had issued a notice dated 21.03.2003 rescinding the
agreement upon the plaintiff’s failure to comply with the agreed
payment schedule.
vii. The Trial Court did not correctly appreciate the legal objections
raised regarding the admissibility of the agreement of sale,
including the objections relating to stamp duty and registration.
viii. The Trial Court erred in drawing adverse conclusions against the
defendant in granting an equitable relief of specific performance
without properly considering the conduct of the plaintiff and the
surrounding circumstances.
ix. Defendant has already cancelled the agreement of sale dated
23.01.2003 by way of issuing notice dated 21.03.2003. Plaintiff
19received the said notice on 22.03.2003.Even then, plaintiff did not
seek declaration to declare the said notice dated 21.03.2003 as
null and void. Plaintiff sought for specific performance of
agreement of sale dated 23.01.2003. Learned trial court did not
consider the said aspect while decreeing the suit.
x. The plaintiff did not deposit the balance sale consideration in the
Court within the time granted by the Trial Court. Therefore,
plaintiff is not entitled for equitable relief of specific performance
of agreement of sale.
xi. Time is the essence of contract and plaintiff failed to adhere to the
same.
xii. Without considering the said aspects, learned trial Court decreed
the suit erroneously. Therefore, impugned judgment and decree is
liable to be set aside.
13. CONTENTIONS OF PLAINTIFF:-
i. It is the defendant which failed to perform its obligations casted
upon it as per on the agreement of sale dated 23.01.2003.
20ii. It has not effected mutation and change of its name in the revenue
record.
iii. There is no clause for cancellation in the agreement of sale dated
23.01.2003.
iv. Plaintiff was always ready and willing to perform her part of
contract in terms of agreement of sale dated 23.01.2003 and it is
the defendant which requested the plaintiff to wait for mutation
and change of its name in the revenue records.
v. Defendant issued notice dated 23.01.2003 cancelling the
agreement of sale illegally though there is no clause in the
agreement of sale to cancel the same on the ground that plaintiff
failed to pay first installment on 28.02.2003. Thus, intention of
the defendant is clear and therefore, there is no need of seeking
declaration to declare the said cancellation notice dated
21.03.2003.
vi. Both the plaintiff and defendant are known to each other.
vii. Suit is filed well within the limitation.
21
viii. Plaintiff and her husband approached Director of defendant with a
request to receive the balance sale consideration and execute a
registered sale deed in her favour.
ix. It is the defendant which failed to receive the balance sale
consideration and execute registered sale deed on the ground that
in the revenue records its name was not changed, mutation was
not effected. Therefore, defendant cannot throw blame on the
plaintiff.
x. There is no clause in the agreement of sale for forfeiture of
advance sale consideration.
xi. Plaintiff has deposited the balance sale consideration in the trial
court as per the orders passed by the trial court within the
timelines lines. There isno default on the part of the plaintiff.
xii. Under the agreement of sale dated 23.01.2003 defendant has
delivered possession of the suit schedule property and therefore
the plaintiff is in possession of the same. Defendant cannot
contend that it is in possession of the suit schedule property.
22
xiii. On consideration of the said aspects only, learned trial Court
decreed the suit.
14. With the said submissions, plaintiff sought to dismiss the
present appeal.
15. We have heard both the learned Senior Counsel appearing for
parties extensively. We gave our thoughtful consideration of the same.
16. Sri Vikram Poosarla, learned senior counsel for defendant and
Sri A.Venkatesh, learned Senior Counsel for the plaintiff placed reliance
on the principle laid down in catena of decisions and the same would be
discussed in the following paragraphs contextually.
17. In the light of the said submissions, the points that arise for
determination of this Court are as follows:-
1. Point No.1: Whether time was the essence of the contract under
the Agreement of Sale dated 23.01.2003 and whether the
alleged failure to adhere to the installment schedule justified the
defendant in refusing performance of the contract?
23
2. Point No.2: Whether Ex.A.1 agreement of sale, dated
23.01.2003, is inadmissible on the ground that it is
unregistered?
3. Point No.3: Whether the plaintiff has established continuous
readiness and willingness to perform her part of the contract as
required under Section 16(c) of the Specific Relief Act, 1963?
4. Point No.4: Whether the Agreement of Sale dated 23.01.2003
was validly cancelled by the defendant and whether the
defendant was entitled to forfeit the advance amount?
5. Point No.5: Whether the mutation of the property in the name
of the defendant affected the enforceability of the Agreement of
Sale dated 23.01.2003 or the rights of the plaintiff to seek
specific performance?
6. Point No.6: Whether the application filed by the plaintiff before
the Trial Court seeking permission to deposit the balance sale
consideration supports the plea of readiness and willingness to
perform the contract?
7. Point No.7: Whether the plaintiff is entitled to the equitable and
discretionary relief of specific performance of the Agreement of
Sale dated 23.01.2003?
8. Point No.8: Whether the plaintiff has to seek declaration to
declare the notice dated 23.03.2003 cancelling the Agreement
of sale dated 23.01.2003, as illegal?
9. Point No.9: Whether, after delivering possession of the suit
property to the plaintiff pursuant to the Agreement of Sale, the
24defendant could lawfully reclaim possession without first
cancelling the agreement of sale in accordance with law?
Point No.8
Whether the plaintiff has to seek declaration to declare the notice dated
23.03.2003 cancelling the Agreement of sale dated 23.01.2003, as
illegal?
18. In the light of the aforesaid facts of the case, we are of the
opinion that it is apt to first deal with point No.8. It is the specific
contention of the learned senior counsel for the defendant that the
defendant has cancelled the agreement of sale dated 23.01.2003 by way
of issuing notice dated 23.03.2003 on the ground that the plaintiff failed
to pay an amount of Rs.7,40,000/- towards first installment on
28.02.2003 as agreed under agreement of sale dated 23.01.2003. The
suit for specific performance is not maintainable when there is no
challenge to the cancellation notice. Thus, the claim of the plaintiff for
specific performance is not maintainable unless as condition precedent,
plaintiff first seeks and obtains declaration to declare the cancellation
notice dated 23.03.2003 cancelling agreement of sale dated 23.01.2003
as illegal. So long as the cancellation remains unchallenged, the
agreement is not in subsistence. He has placed reliance on the principle
25
laid down by the Apex Court in I.S.Sikandar (Dead) by L.Rs. vs.
K.Subramani1, Sangita Sinha vs. Bhawana Bhardwaj2, Annamalai
vs. Vasanthi and others3, K.S. Manjunath vs. vs. Moorasavirappa @
Muttanna Chennappa 4, A. Kanthamani vs. Nazreen Ahmed 5, to
contend that once the agreement of sale is terminated, the plaintiff has to
necessarily seek declaration to declare the same as illegal. In the
absence of the said relief, suit for specific performance is not
maintainable.
19. In the light of the said submissions, it is apt to note that
considering the principle laid down by the Apex Court in the aforesaid
judgments, in Sangita Sinha (supra), the Apex Court held that where the
seller had issued a communication cancelling the agreement prior to the
institution of the suit, such cancellation constitutes a jurisdictional fact
directly affecting the maintainability of a suit for specific performance.
The Court observed that unless the plaintiff seeks and obtains a
1
(2013) 15 SCC 27
2
AIR 2025 SC 1806
3
2025 SCC OnLine SC 2300
4
2025 INSC 1298
5
AIR 2017 SC 1236
26
declaratory relief challenging such cancellation as being illegal or non-
binding, the agreement cannot be treated as subsisting for the purpose of
enforcing specific performance. It was therefore held that in the absence
of a prayer seeking declaration that the termination or cancellation of the
agreement is invalid in law, a suit for specific performance of that
agreement is not maintainable, as the existence of a valid and subsisting
contract is a sine qua non for the grant of such equitable relief.
20. In Annamalai (supra), the Apex Court held that a declaratory
relief seeks to clear what is doubtful, and which is necessary to make it
clear. If there is a doubt on the right of a plaintiff, and without doubt
being cleared, no further relief can be granted, a declaratory relief
becomes essential because without such declaration, the consequential
relief may not be available to the plaintiff. A declaratory relief would be
required where a doubt or a cloud is there on the right of the plaintiff
and grant of relief to the plaintiff is dependant on removal of that doubt
or cloud. However, whether there is a doubt or cloud on the right of the
plaintiff to seek consequential relief, the same is to be determined on the
facts of each case.
27
21. Apex Court further held that for example a contract may give
right to the parties, or anyone of the parties, to terminate the contract on
existence of certain conditions, in terms thereof, the contract is
terminated, a doubt over subsistence of the contract is created and,
therefore, without seeking a declaration that termination is bad in law, a
decree for specific performance may not be available. However, where
there is no such right conferred on any party to terminate the contract, or
the right so conferred, is waived, yet the contract is terminated
unilaterally, such termination may be taken as a breach of contract by
repudiation and the party aggrieved may, by treating the contract as
subsisting, sue for specific performance without seeking declaratory
relief, qua validity of such termination.
22. In the said case, as per the contents of the agreement of sale,
the purchaser has to pay an amount of Rs.10,000/- within six months.
The said amount was not paid within the aforesaid time. Even then,
learned owners/sellers accepted an additional sum of Rs.1,95,000/- after
expiry of the aforesaid stipulated period of six months. They have
already made endorsement receiving and acknowledging the said
28
amount of Rs.1,95,000/-. On examination of the said facts and also
considering the scope of Section 55 of the Contract Act, the Apex Court
held that the original land owners accepted performance of agreement of
sale after the stipulated time enabling the delayed performance treating
sale deed as subsisted, they waived their right to terminate on the
ground of delay. Therefore, subsequent termination notice dated
20.08.2010 was held to be invalid. In such circumstances, there is no
need of seeking declaration to declare the termination notice as invalid.
23. In K.S. Manjunath (supra) considering the principle laid
down in Annamalai (supra), the Apex Court laid down certain
principles of law that are discernible in paragraph No.43 and the same
is relevant and it is extracted below:-
43. Thus, in view of the above discussion, the following principles of
law are discernible:
(i). Unilateral termination of the agreement to sell by one party is
impermissible in law except in cases where the agreement itself is
determinable in nature in terms of Section 14 of the Act of 1963;
(ii). If such unilateral termination of a non-determinable agreement to
sell is permitted as a defence, then virtually every suit for specific
performance can be frustrated by the defendant by placing an unfair
burden on the plaintiff, who despite performing his part of the
obligations and having showcased readiness and willingness, would
require to also seek a separate declaration that the termination was bad in
29law. In such cases, the burden cannot be casted upon the plaintiff to
challenge the alleged termination of agreement;
(iii). Where a party claims to have valid reasons to terminate or rescind
a non-determinable agreement to sell, with a view to err on the side of
caution, it should be such terminating party, if at all, who ideally should
approach the court and obtain a declaration as to the validity of such
termination or rescission, and not the non-terminating party. However,
this must not mean that the defendant (the terminating party) in such
cases would mandatorily be required to seek a declaration
because Sections 27 and 31 of the Act of 1963 respectively, while using
the phrase “may sue” merely give an option to any person to have the
contract rescinded or adjudged as void or voidable;
(iv). Once the alleged termination of a non-determinable agreement in
question is found to be not for bona fide reasons and being done in a
unilateral manner on part of the defendant, it cannot be said that any
declaration challenging the alleged termination was required on part of
plaintiff;
(v). If a contract itself gives no right to unilaterally terminate the
contract, or such right has been waived, and a party still terminates the
contract unilaterally then that termination would amount to a breach by
repudiation, and the non-
terminating party can directly seek specific performance without first
seeking a declaration; and
(vi). In the event it is found that the termination of agreement to sell by
the defendant was not valid, then such an agreement to sell will remain
subsisting and executable.
24. On examination of the facts of the case and also considering
the principle laid down by the various High Courts, the Apex Court held
that unilateral termination of the agreement is impermissible in law
except in cases where the agreement itself is determinable in nature in
terms of Section 14 of the Act of 1963.
30
25. In the light of the aforesaid law laid down by the Apex Court,
coming to the facts of the case on hand, it is apt to extract relevant
clauses of Ex.A.1 agreement of sale dated 23.01.2003:-
2 WHEREAS the purchaser has paid the part payment of sale
consideration i.e. Rs.2,00,000/- (Rupees Two Lakhs Only) to the Vendor
and the Vendor has hereby received and acknowledges the receipt of the
same. WHEREAS the entire balance of sale consideration i.e.,
Rs.35,55,000/- (Rupees Thirty Five Lakhs and Fifty Five Thousand
Only) shall be paid to the Vendor in installments as follows from the date
of the execution of this Agreement of sale i.e., as on or before 31 August
2003. Time is the essence of this Agreement.
a. First installment of Rs.7,40,000/- (Rupees Seven Lakhs Forty
Thousand Only) on 28th February 2003.
b. Second installment of Rs.13,25,000/- (Rupees Thirteen Lakhs
Twenty Five Thousand Only) on 31st May 2003.
c. Third installment of Rs.14,90,000/- (Rupees Fourteen Lakhs
Ninety Thousand Only) on 31st August 2003.
8. The Vendor hereby assure the vendee that the vendor shall deliver the
original documents of title together with link documents, pahanis,
mutation, nil encumbrance certificates. The vendor has already furnished
photostat copies of the above mentioned sale deeds, link documents,
pahanis, encumbrance certificates to the vendee to enable the vendee to
go into the title by verification of the documents.
31
26. Thus, as per clause No.8 of the agreement of sale, the
defendant being the vendor, agreed to deliver original documents of title
together with link documents, pahanis, mutation, nil encumbrance
certificates. It has already furnished Photostat copies of the same to
enable the plaintiff to go into the title by verification of the documents.
It is the specific contention of the defendant that it has already furnished
photostat copies of the aforesaid documents and plaintiff also admitted
the said fact.
27. It is not in dispute that there is change of name of the
defendant i.e. from R.R. Heterocyclics Limited to M/s Yogasai Health
Resorts Limited w.e.f. 11.06.2002.
28. It is also not in dispute that the defendant purchased the suit
land under registered sale deeds bearing document Nos.1173 dated
04.03.1996 and 1281 of 1996 dated 08.03.1996 in its former name
R.R.Heterocyclics Limited from the plaintiff. It is also not in dispute
that further portion of the suit land was purchased by defendant vide
sale deed bearing document No.4952 of 2002, dated 08.08.2002 in the
name of Yogasai Health Resorts Limited. Therefore, there is specific
32
Clause in the agreement of sale that the defendant has to get mutation of
the land in its favour by changing name in the revenue records.
Admittedly, the same was not effected. The said fact was also admitted
by D.W.1 in his cross-examination. Therefore, the defendant cannot
blame the plaintiff that the plaintiff has not paid the balance sale
consideration as agreed in the agreement of sale dated 23.10.2003, more
particularly, an amount of Rs.7,40,000/- towards first installment on
28.02.2003.
29. It is also apt to note that as per clause No.2 of the agreement
of sale, the plaintiff agreed to pay the balance sale consideration of
Rs.33,55,000/- in three installments. The plaintiff has to pay entire
balance sale consideration on or before 31.08.2003. In clause No.2 of
the agreement of sale, it is also mentioned that time is essence of the
agreement. In the said agreement of sale, there is no clause for
cancellation of the agreement of sale for non-payment of either first
installment or other installments within the timelines. There is no clause
to forfeit the advance sale consideration paid by the plaintiff. Even then,
the defendant had cancelled the agreement of sale dated 23.01.2003 by
33
way of issuing notice dated 21.03.2003. Thus, there is no cloud over the
right of the plaintiff to seek declaration to declare the notice dated
23.03.2003 as illegal. The said principle was also laid down by the Apex
Court in Annamalai and K.S.Manjunath (supra).
30. In the light of the aforesaid discussion, the contention of the
learned counsel for the defendant in the absence of the relief of
declaration, the plaintiff cannot seek specific performance of agreement
of sale is untenable. We are of the considered view that there is no need
of seeking declaration. Therefore, this issue is answered in favour of the
plaintiff.
Point No.1:
Whether time was the essence of the contract under the Agreement
of Sale dated 23.01.2003 and whether the alleged failure to adhere
to the installment schedule justified the defendant in refusing
performance of the contract?
31. It is the specific contention of the learned senior counsel for
the defendant that the Court has to consider express terms of contract,
nature of property and surrounding circumstances including object of
34
the contract. The relief of specific performance is an equitable and
discretionary relief. Therefore, when a contract prescribes specific
time/period for performance, such stipulation must have significance
and cannot be ignored. He has placed reliance on the principle laid
down by the Apex Court in Chand Rani vs. Kamal Rani 6,
Saradamani Kandappan vs. S.Rajalakshmi 7.
32. As discussed supra, in the present case, there is no clause for
cancellation of agreement of sale on the ground of non-payment of
installments, more particularly, first installment of Rs.7,40,000/-on
28.02.2003. There is also no clause to forfeit the advance sale
consideration paid by the plaintiff. It is apt to note that in Clause No.2
of the agreement of sale, it is specifically mentioned that plaintiff shall
pay balance sale consideration of Rs.35,55,000/- in installment basis
from the date of agreement of sale i.e. on or before 31.08.2003. Time is
essence of the agreement. Thus, the plaintiff has to pay entire balance
sale consideration of Rs.35,55,000/- on or before 31.08.2003. Therefore,
the defendant cannot contend that the plaintiff failed to pay first
6
(1993) 1 SCC 519
7
(2011) 12 SCC 18
35
installment and therefore, it has cancelled the agreement of sale by way
of issuing notice, dated 21.03.2003. The defendant cannot claim that
time is essence of contract. The Court has to consider express terms of
contract, nature of the property and surrounding circumstances. The said
principle was also held by the Apex Court in Chand Rani (supra).
33. In the present case, nature of property is an agricultural
property, the defendant agreed to get its name mutated in the revenue
records as per clauseNo.8 of the agreement of sale, dated
23.01.2003.Admittedly, the defendant failed to mutate its name in the
revenue records. Therefore, the defendant cannot contend that the
plaintiff failed to pay the balance sale consideration and that time is
essence of the contract.
34. It is apt to note that there was no unexplained delay on the part
of the plaintiff.
35. The Apex Court in Chand Rani (supra) held that in contracts
relating to sale of immovable property, time is ordinarily not regarded as
the essence of the contract unless such intention is expressly stated or
36
can be clearly inferred from the terms of the agreement and surrounding
circumstances.
36. In Saradamani Kandappan (supra), the Supreme Court held
that the determination of whether time is the essence of the contract
must still depend upon the intention of the parties as reflected in the
terms of the agreement and the conduct of the parties.
37. In K.R. Suresh vs. R.Poornima 8, the Apex court held that
“whether time is of the essence in a contract”, has to be culled out from
the reading of the entire contract as well as the surrounding
circumstances. Merely having an explicit clause may not be sufficient to
make time the essence of the contract.
38. In Indira Kaur vs. Sheo Lal Kapoor 9, the Apex Court held
that in transactions of sale of immovable properties, time is not the
essence of the contract. In the case of immovable property, there is no
presumption as to time being the essence of the contract.
8
2025 SCC OnLine SC 1014
9
(1988) 2 SCC 488
37
39. In the present case, this Court has to consider the evidence on
record and also conduct of the parties. As discussed supra, the defendant
agreed to get mutation of its name in the revenue record as per clause
No.8 of the agreement of sale, dated 23.01.2003. Admittedly, defendant
did not get mutation of its name in the revenue record. Without
performing the said obligation casted upon the defendant, it cannot
contend that the plaintiff failed to pay the balance sale consideration,
more particularly, first installment within the agreed time. Perusal of the
evidence would also reveal the said fact.
40. It is also apt to note that the plaintiff has paid an amount of
Rs.2,00,000/- to the defendant towards advance sale consideration. The
installment schedule appears to be indicative of intended timeframe for
completion of the transaction rather than a condition precedent shows
breach or automatic termination of the agreement. The Apex Court
consistently held that the intention to seek time is essence of contract
must be clear and cannot from the circumstances of time schedule in the
agreement.
38
41. In the light of the aforesaid discussion, this Court is of the
view that time cannot be said to have been essence of contract in the
present case. Accordingly, this point is held in favour of the plaintiff.
Point No.2:
Whether Ex.A.1 agreement of sale, dated 23.01.2003, is
inadmissible on the ground that it is unregistered?
42. It is apt to note that Ex.A.1 is an unregistered agreement of
sale. During pendency of the said suit, plaintiff got it impounded as per
the procedure laid down under the Indian Stamp Act, 1899, by paying
stamp duty and an amount of Rs.2,25,000/- towards penalty vide
endorsement under Sections 41 and 42 of the Indian Stamp Act, 1899
vide File No.G1/1343/05, dated 15.11.2005 issued by District Registrar
and collector under the Indian Stamp Act, 1899, Medak at Sanga Reddy.
Therefore, Ex.A.1 is admissible in evidence. On consideration of the
said aspects only, learned trial court marked the said agreement of sale
as Ex.A.1. There was no objection from the defendant while marking
the said Ex.A.1.
39
43. It is also apt to note that plaintiff has paid deficit court fee of
Rs.4000/- on 05.08.2005 itself.
44. This point is accordingly answered in favour of the plaintiff.
Point No.3:
Whether the plaintiff has established continuous readiness
and willingness to perform her part of the contract as
required under Section 16(c) of the Specific Relief Act,
1963?
45. Section 16 (c) of the Specific Relief Act, 1963, is relevant and
the same is extracted below:-
16. Personal bars to relief.–
Specific performance of a contract cannot be
enforced in favour of a person–
(a) who would not be entitled to recover
compensation for its breach; or
(b) who has become incapable of performing,
or violates any essential term of, the contract that on
his part remains to be performed, or acts in fraud of the
contract, or willfully acts at variance with, or in
subversion of, the relation intended to be established
by the contract; or
40
(c) who fails to aver and 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.
Explanation.–For the purposes of clause
(c),–
(i) where a contract involves the payment of
money, it is not essential for the plaintiff to actually
tender to the defendant or to deposit in court any
money except when so directed by the court;
(ii) the plaintiff must aver performance of, or
readiness and willingness to perform, the contract
according to its true construction.
46. It is the specific contention of the plaintiff in the plaint that
she has requested the defendant to receive first installment amount of
Rs.7,40,000/- on 28.02.2008 as agreed, but the defendant requested her
to wait for some time as the name of M/s. Yogasai Health Resorts
Limited is not entered in the revenue records and it has to obtain
pattadar passbooks in its favour. Contrary to the same, defendant has
issued notice dated 21.03.2003 terminating the agreement of sale on the
ground of non-payment of first installment. On receipt of the said
41
notice, immediately, she approached the defendant to receive the first
installment amount on 02.04.2003, but defendant informed her that it
will receive the first installment along with second installment. Again
plaintiff approached the defendant on 31.05.2003 and again on
31.08.2003 along with entire consideration as agreed with a request to
receive the same and execute and register sale deed in her favour. Thus,
plaintiff was always ready and willing to pay the balance sale
consideration to the defendant and it is the defendant which postponed
the same on the ground that its name was not mutated in the revenue
record. According to the plaintiff, there was steep hike in the lands
within the vicinity of the suit schedule property, therefore, the defendant
cancelled the agreement of sale with a mala fide intention.
47. To prove the same plaintiff examined herself as P.W.1 and
her husband as P.W.2. Their examination in chief is in the aforesaid
lines. However, during cross-examination plaintiff (P.W.1) categorically
admitted about the contents of Ex.A.1, payment of an amount of
Rs.2,00,000/- towards advance sale consideration and also the timelines.
According to her, her husband and one Mallikarjun Reddy were present
42
at the time of execution of Ex.A.1 agreement of sale and they are the
attesting witnesses. In Ex.A.1, it is not mentioned that the sale deed has
to be executed and registered only after mutation of the name of the
defendant in the revenue records, she did not file any document in
support of her plea that she has Rs.;7,40,000/- on 28.02.2003. She did
not issue any reply to Ex.A.3 and any notice informing to the defendant
that she was willing and ready to pay the entire sale consideration and
requesting him to execute registered sale deed. However, she orally
informed the defendant personally by going to the house of Director of
defendant at S.R.Nagar along with her husband. She further admitted
that Sri Shastry, Director of Defendant company and herself were
staying at S.R.Nagar, at that point of time and therefore, she went to the
house of the said Sri Shastry and informed him personally prior to
issuance of Ex.A.3. She further admitted that after issuance of Ex.A.3
also she personally informed Mr.Shastry who used to reside in a portion
of house, but not an apartment. She has also taken an amount of
Rs.7,40,000/-, first installment with her to the house of said Mr.Shastry
to pay it to him. However, she has not mentioned the said fact in the
43
plaint. She again went to his house after receipt of Ex.A.3 notice and her
husband went to his house several times. Week days after receipt of
Ex.A.3, she personally approached Mr.Shastry by going to his house.
48. P.W.2 husband of P.W.1, during cross-examination, admitted
that they did not file any passbook and bank intimation to show that his
wife is ready with the balance amount to make payment towards the suit
land. He is having 20 acres of land by the side of the suit land and the
price of the land abutting to the suit land increased many folds.
49. It is also apt to note that D.W.1 director of defendant
company Mr. S.V.R.Shastry, during cross-examination categorically
admitted that there are four directors in the defendant company and also
passing of resolution by the said Directors on 15.01.2003 authorizing
him to sign Ex.A.1 agreement of sale. He has also admitted about the
aforesaid installments and dates of payment of the same. He did not
inform to the plaintiff prior to the filing of the suit that the mutation in
respect of suit land was effected in the name of the defendant. They
have not obtained title deed and pattadar passbook from MRO office in
respect of suit schedule land. The authorities have informed them that
44
they will not issue pattadar passbook and title deeds to the companies,
but they would issue the same to the individuals. Nothing is given in
writing to that effect. There is no clause in the agreement for forfeiture
of the amount.
50. As per the provisions of the Telangana Rights in Land and
Pattadar Pass Books Act, 1971 and also Rules framed thereunder, it is
permissible for the companies to obtain mutation proceedings, pattadar
passbooks and title deeds For the said reasons only, the defendant agreed
to get its name mutated in the revenue record and obtain pattadar
passbooks and title deeds.
51. The afore-stated facts would reveal that the defendant agreed
for getting mutation of its name in revenue records at clause No.8 of
Ex.A.1 agreement of sale. Admittedly, mutation was not effected in the
name of the defendant. Though the D.W.1 contended that mutation was
effected by the time of filing of the suit, but during cross-examination,
he has admitted that he did not inform the plaintiff with regard to
mutation of defendant’s name in the revenue record in respect of the suit
schedule property. He has further admitted that there is no clause in
45
Ex.A.1 for cancellation of agreement of sale on the ground of non-
payment of installments within the agreed timelines and also forfeiture
of advance sale consideration.
52. It is the specific contention of the plaintiff that after issuing
Ex.A.3 notice, the defendant entered into agreement of sale to sell the
suit schedule property to Sri V.Sudhakar and others. Thereafter, she has
issued telegraphic notice to them and also a caution notice in Eanadu
News Daily.
53. It is relevant to note that basing on Ex.A.1 agreement of sale,
the plaintiff’s name was mentioned in the revenue record and therefore,
the defendant had filed an appeal and revision etc. as per the provisions
of ROR Act, 1971.
54. Defendant company having entered Ex.A.1 agreement of sale,
receiving an amount of Rs.2,00,000/- towards advance sale
consideration on 21.03.2003, agreed to effect mutation of its name in
revenue record, failed to inform the plaintiff about mutation with a
request to pay the balance sale consideration and obtain registered sale
46
deed in respect of the suit schedule property. Thus, defendant
unilaterally cancelled Ex.A.1 agreement of sale by way of issuing
Ex.A.3 notice.
55. It is apt to note that in Mankour (dead) by L.Rs. vs. Hartar
Singh Sangha10, the Apex Court clarified that breach of contract by the
defendant and ready and willingness of the plaintiff are two distinct
issues in a suit for specific performance. even if, a defendant is proved
to have committed breach, the plaintiff cannot obtain a decree unless he
pleads and proves that he was always ready and willing to perform the
essential terms of the contract as required under Section 16 (c) of the
Act, 1963. Even if, the vendor wrongfully refuses to execute the sale
deed, if the purchaser did not possess the financial capacity to pay the
balance sale consideration at the time of the performance, he is not
entitled to the specific performance.
56. In N.P.Thirugnanam (dead) by L.Rs. vs. Dr.Jaganmohan
Rao11, the Apex Court held that the conduct of the plaintiff, prior and
10
(2010) 10 SCC 512
11
1995 5 SCC 115
47
subsequent to filing of the suit, availability of funds, surrounding
circumstances are the relevant factors in determining whether the
plaintiff has genuinely ready and willing to perform his part of contract.
If the plaintiff fails to prove such readiness and willingness by
producing relevant evidence, the relief of specific performance cannot
be granted.
57. In Smt. Chandrakanthamma vs. D.Ramakrishnaiah 12, the
Karnataka High Court reiterated the aforesaid principle.
58. In R.Kandaswamy vs. TRK Saraswathi 13, the Apex Court
held that relief of specific performance is discretionary and equitable in
nature. The plaintiff must plead and prove continuous readiness and
willingness to perform the essential terms of the contract from the date
of the agreement until the decree. The expression ‘ready and
willingness’ signifies that the plaintiff must possess both the intention
and financial capacity to perform the contractual obligations,
particularly the obligation to pay the balance sale consideration. Mere
12
(2015) SCC OnLine Kar. 6141
13
(2025) 2 SCC 513
48
assertions in pleadings are insufficient, plaintiff must place material on
record demonstrating availability of funds or capacity to arrange the
same within the stipulated time. In the absence of the same, plaintiff
would not be entitled to the discretionary relief of specific performance.
59. Learned senior counsel appearing for the defendant relied on
the judgment of the Apex Court in Chand Rani (supra) to contend that
in suits for specific performance, readiness and willingness of the
purchaser to perform his part of the contract is a fundamental
requirement, and failure to comply with contractual timelines may
disentitle the plaintiff from relief. In the said judgment, the Apex Court
held that although time is ordinarily not the essence in contracts relating
to immovable property, the Court must examine the following
conditions:-
i. Express terms of the contract,
ii. Nature of property, and
iii. Surrounding circumstances.
To determine whether performance within the stipulated time was
intended. The Court further held that where the conduct of the purchaser
49demonstrates lack of readiness and willingness to perform contractual
obligations, the decree for specific performance cannot be granted.
60. Relevant paragraphs are extracted below:-
25. From an analysis of the above case-law it is clear
that in the case of sale of immovable property there is no
presumption as to time being the essence of the contract. Even
if it is not of the essence of the contract the Court may infer that
it is to be performed in a reasonable time if the conditions are:
1. From the express terms of the contract;
2. from the nature of the property; and
3. from the surrounding circumstances, for example: the
object of making the contract.
29. The analysis of evidence would also point out that
the plaintiff was not willing to pay this amount unless vacant
delivery of possession of one room on the ground floor was
given. In cross-examination it was deposed that since income
tax clearance certificate had not been obtained the sum of Rs
98,000 was not paid. Unless the property was redeemed the
payment would not be made. If this was the attitude it is clear
that the plaintiff was insisting upon delivery of possession as a
condition precedent for making this payment. The income tax
certificate was necessary only for completion of sale. We are
unable to see how these obligations on the part of the defendant
could be insisted upon for payment of Rs 98,000. Therefore, we
conclude that though as a general proposition of law time is not
the essence of the contract in the case of a sale of immovable
property yet the parties intended to make time as the essence
under clause (1) of the suit agreement. From this point of view,
we are unable to see how the case in Nathulal [(1969) 3 SCC
120 : (1970) 2 SCR 854] could have any application to the facts
of this case.
50
61. In Saradamani Kandappan (supra), the Apex Court while
examining the doctrine that time is generally not the essence in contracts
relating to immovable property, clarified that such a principle cannot be
applied mechanically in modern commercial realities. The Court
observed that although earlier precedents treated time stipulations in
property contracts as merely indicative, the significant escalation in
property values and changing economic circumstances require courts to
give due significance to the time stipulations agreed between the parties.
Where the contract clearly prescribes specific dates for payment of
consideration and provides consequences for default, such stipulations
may demonstrate the intention of the parties to treat time as the essence
of the contract. In such circumstances, failure to adhere to the agreed
schedule of payment may justify termination of the agreement and
disentitle the purchaser from seeking the equitable relief of specific
performance.
62. In Padmakumari and others v. Dasayyan and others14, the
Apex Court, emphasized that where the agreement of sale stipulates a
14
(2015) 8 SCC 695
51
specific period for payment of the balance consideration, failure on the
part of the purchaser to comply with such stipulation assumes significant
legal importance in determining entitlement to specific performance.
The Court held that when the purchaser does not pay the balance
consideration within the agreed period and no acceptable explanation is
offered for such default, the conduct of the purchaser clearly indicates
lack of readiness and willingness to perform the essential terms of the
contract. The Court further observed that courts must carefully examine
the contractual terms and surrounding circumstances and cannot ignore
such material aspects while granting the equitable relief of specific
performance. Accordingly, non-compliance with the stipulated time for
payment of consideration may disentitle the purchaser from obtaining
the relief sought.
63. The defendant also relied on the judgment of the Apex Court
in I.S. Sikandar (Dead) by LRs (supra), to emphasize that strict
compliance with the contractual terms and timelines is essential where
the agreement expressly stipulates a time period for completion of the
transaction. The Supreme Court held that where the plaintiff fails to
52
perform his obligations within the stipulated period and the agreement
stands terminated in accordance with its terms, the plaintiff cannot
subsequently seek specific performance of such terminated agreement.
The Court further reiterated that the plaintiff must establish continuous
readiness and willingness to perform the contract as mandated under
Section 16(c) of the Specific Relief Act.
64. In A. Kanthamani (supra), the Apex Court held that the plea
regarding the maintainability of suit is required to be raised in the first
instance in the pleadings i.e. written statement and then only such plea
can be adjudicated by the trial Court on its merits as a preliminary issue
under Order XIV Rule 2 of CPC. Once a finding is rendered on the plea,
the same can be examined by the first or/and second appellate Court.
Unless an issue as to maintainability is framed by the trial Court, the suit
cannot be held to be not maintainable at the appellate stage only.
65. As discussed supra, in the present case, the defendant did not
plea with regard to maintainability of the suit either in the written
statement or during trial.
53
66. In R.Shama Naik vs. G.Srinivasaiah15, the Apex court held
as follows:-
9. There is a legion of precedents on the subject of
readiness and willingness.
10. The law is well settled. The plaintiff is obliged not
only to make specific statement and averments in the
plaint but is also obliged to adduce necessary oral and
documentary evidence to show the availability of
funds to make payment in terms of the contract in
time.
11. There is a fine distinction between readiness and
willingness to perform the contract. Both the
ingredients are necessary for the relief of specific
performance.
12. While readiness means the capacity of the plaintiff
to perform the contract which would include his
financial position, willingness relates to the conduct of
the plaintiff.
67. In Sangeeta Sinha (supra) also, the Apex Court held the
aforesaid principle.
68. In Annamalai (supra), the Supreme Court examined the scope
of the relief of specific performance under Sections 16(c) and 20 of the
Specific Relief Act, 1963, particularly in relation to the requirement of
continuous readiness and willingness of the purchaser. The dispute arose
from an agreement of sale, where the purchaser sought enforcement of
15
2024 INSC 927
54
the agreement after disputes arose regarding performance and
subsequent sale of the property to a third party. The trial court dismissed
the suit holding that the agreement was not acted upon within the
stipulated period and that the plaintiff had failed to establish readiness
and willingness. The first appellate court reversed the finding and
decreed the suit for specific performance; however, the High Court
interfered and directed refund of the advance amount instead.
69. While examining the matter, the Supreme Court reiterated the
settled principle that in a suit for specific performance, the plaintiff must
plead and prove continuous readiness and willingness to perform his part
of the contract from the date of the agreement till the decree. The Court
clarified that “readiness” relates to the financial capacity of the
purchaser to pay the sale consideration, whereas “willingness” refers to
the intention and conduct of the purchaser demonstrating his
commitment to complete the transaction. The Court emphasized that
these two elements must coexist and must be established through
pleadings, evidence, and the conduct of the parties. If the purchaser fails
55
to establish these statutory requirements, the equitable relief of specific
performance cannot be granted.
70. The decision further reiterates that courts must carefully
evaluate the conduct of the plaintiff, the surrounding circumstances, and
compliance with the contractual obligations before granting the
discretionary remedy of specific performance.
71. In the present case, the defendant rely upon the said judgment
to contend that the plaintiff must demonstrate clear evidence of
readiness and willingness throughout the contractual period, and any
failure to comply with the contractual terms or payment schedule would
disentitle the plaintiff from obtaining a decree for specific performance.
72. In Zarina Siddique vs. A.Ramalingam 16, the Apex Court
held that relief of specific performance is equitable and discretionary
and therefore, courts have to consider the conduct of the parties and that
parties must come before the court with clean hands.
16
(2015) 1 SCC 705
56
73. In Syed Dastagiri vs. T. R. Gopalakrishna Shetty 17, the
Apex Court held that plaintiff can always tender the amount to the
defendant or deposit in the court, towards performance of his obligation
under the contract. Such tender rather exhibits the willingness of the
plaintiff to perform his part of obligation. What is not essential is only
means need not do but does not mean he cannot do so. When the
plaintiff has tendered the balance amount in Court even without the
court order, it cannot be constitute adversely against the plaintiff under
explanation -1 of Section 16 (c) of the Act, 1963.
74. In R.C.Chandiok vs. Chunilal Subarwal18, the Apex court
held that readiness and willingness cannot be treated as straightjacket
formula. This has to be determined from the entirety of the facts and
circumstances relevant to the intention and conduct of the party
concerned.
17
(1999) 6 SCC 337
18
1970 (3) SCC 140
57
75. In Sugarsingh vs. Harisingh (dead through L.Rs.) and
others19, the Apex Court held that the Court while dealing with suit for
specific performance, more particularly readiness and willingness to
perform the contract has to consider overall circumstances, conduct on
the part of the parties and prayer of the plaintiff in whose favour
execution of agreement shall has been held to be proved. They are the
relevant factors to be considered for the purpose of deciding readiness
and willingness.
76. In Motilal Jain vs. Ramdasi Devi 20, the Apex Court held that
the readiness and willingness need not be in specific phraseology and
language. The sum and substance of the principle laid down in the
aforesaid judgment is that relief of specific performance is an equitable
and discretionary relief. The parties seeking the said relief have to
approach the court with clean hands. The court while dealing suit for
specific performance has to consider the conduct of the parties and
overall circumstances of the case.
19
(2021) 17 SCC 705
20
AIR 2000 SCC 2408
58
77. As discussed supra, in the present case, in Ex.A.1 agreement
of sale, defendant has specifically agreed that it will get its name
mutated in the revenue record, hand over the original documents of title,
passbooks, Encumbrance Certificate, pahani etc. Admittedly, it has not
got its name mutated in the revenue record in respect of the suit
schedule property. D.W.1 – Director of the defendant company
categorically admitted the said fact. However, according to him,
mutation was affected before filing of the suit. But defendant company
did not inform the said fact to the plaintiff and D.W.1 admitted the said
fact, during cross-examination.
78. As discussed supra, parties are not strangers to each other.
Earlier the plaintiff was the owner of the part of the suit schedule
property and she sold the same to the defendant company under the
aforesaid two registered sale deeds. Thus, parties are known to each
other. Though there is no clause to cancel the agreement of sale and
forfeiture of the advance sale consideration, defendant cancelled the
agreement of sale unilaterally. Before issuing cancellation notice,
59
defendant did not demand the plaintiff to pay first installment of
Rs.7,40,000/-.
79. It is the specific contention of the plaintiff that she and her
husband approached Mr. Shastry, Director of the defendant company,
with a request to receive balance sale consideration execute and register
sale deed on getting mutation of defendant’s name in the revenue
record. He has informed the plaintiff and her husband that he will
receive the balance sale consideration once the defendant’s name is
mutated in revenue record.
80. There was no unexplained delay on the part of the plaintiff.
She has deposited the balance sale consideration in the court with
permission of the Court vide I.A.No.1570 of 2005 dated 16.08.2005. It
is the defendant which issued Ex.A.3 termination notice and put full
stop to the further transaction.
81. It is apt to note that in paragraph No. 6 (iii) of the written
statement, defendant has contended that in spite of number of personal
and telephonic conversations, plaintiff failed to perform her part of
60
contract and willfully defaulted. Therefore, it has rescinded the
agreement by issuing notice and forfeited the advance sale
consideration. The said fact is also mentioned in Ex.A.3 (B.3) notice
dated 21.03.2003. Thus, both the plaintiff and defendant admitted with
regard to contacting each other with regard to Ex.A.1 transaction and
payment of balance sale consideration. They are in touch with each
other. There is no explanation from the defendant as to the information
furnished to the plaintiff with regard to effecting mutation in its name
before issuing Ex.A.3 notice. There is no evidence to show that
defendant has informed the plaintiff that it has got its name mutated in
respect of suit schedule property and the same was informed to the
plaintiff and even then, plaintiff did not pay the balance sale
consideration within the agreed timelines including first installment. In
the absence of the same, defendant cannot blame that the plaintiff did
not pay the first installment on 28.02.2003.
82. It is apt to note that as per clause 8 of the Ex.A.1 agreement
of sale, the defendant agreed to get the mutation of its name in revenue
record and hand over the original documents of title together with link
61
documents, pahanis, mutation, nil Encumbrance Certificates etc, to the
plaintiff but the defendant failed to do so. DW.1 has admitted the said
fact during cross-examination. Thus, there is breach of contract on the
part of the defendant. Even then, plaintiff and her husband went to the
house of D.W.1 and expressed her readiness and willingness to perform
her part of contract. The continuous readiness and willingness on the
part of the plaintiff is a condition precedent to grant the relief of specific
performance, this circumstance is material and relevant and is required
to be considered by the Court while granting or refusing to grant the
relief, the court has to consider the conduct of the parties prior and
subsequent to filing of suit. In the present case, the plaintiff had
deposited the balance consideration in the Court on obtaining
permission by filing IANo.1507 of 2005 itself It is a material and
attendant circumstance.
83. It is apt to note that in Beemaneni Maha Lakshmi vs
Gangumalla Appa Rao (Since Dead) By Lrs21, the facts are that
under the agreement of sale, it was agreed between the parties that the
21
(2019) 6 SCC 233
62
vendor has to get the land measured and produce all the documents
including litigation documents making out a complete chain of the
title of the vendor before paying balance consideration. He has also
agreed to deliver the original sale deed. The vendor did not carry out
measurements of the suit property after execution of the agreement of
sale. D.W.1 admitted the said fact during the cross-examination. On
consideration of the said aspects, the Apex Court held that the
plaintiff was under no obligation to deposit/pay balance sale
consideration and the plaintiff insisting of production of papers of
Land Tribunal proceedings was natural conduct. The Apex Court
further held that both the trial Court and the Appellate Court are
justified in holding that the plaintiff insisted on the seller producing
all the documents necessary for making out complete chain of his
title.
84. Thus, defendant failed to perform its part of contract under
Ex.A.1 agreement of sale. On consideration of the said aspect only,
63
learned trial court decreed the suit. Thus, this point is answered in favour
of the plaintiff.
Point No.4:
Whether the Agreement of Sale dated 23.01.2003 was validly
cancelled by the defendant and whether the defendant was
entitled to forfeit the advance amount?
85. As discussed supra, there is no clause in Ex.A.1 agreement of
sale either to cancel the agreement of sale or to forfeit the advance sale
consideration on the ground of non-payment of balance sale
consideration in three installments within the agreed timelines. It is also
agreed by the defendant that it will get its name mutated in the revenue
record in clause No.8 of Ex.A.1. Admittedly, its name was not mutated.
D.W.1 admitted the said fact. Even record discloses the said fact. Even
then, defendant cancelled the agreement of sale by way of issuing
Ex.A.3 (B.2) notice and forfeited the advance sale consideration. The
same is contrary to the terms of the Ex.A.1 agreement of sale.
86. It is apt to note that in the absence of the specific clause in the
agreement of sale for cancellation, we have to consider the common law,
right of a party in terms of Section 39 of the Indian Contract Act, 1982
64
which deals with regard to effect of refusal of party to perform promise
wholly which is relevant and extracted below:-
39. Effect of refusal of party to perform promise wholly.–
When a party to a contract has refused to perform, or disabled himself
from performing, his promise in its entirety, the promisee may put an end
to the contract, unless he has signified, by words or conduct, his
acquiescence in its continuance
87. Learned counsel for the defendant contended that even in the
absence of a clause, enabling a party to terminate, the agreement can be
terminated even without assigning any reason. He has also placed
reliance on the principle laid down by the Division Bench of Delhi High
Court in Rajasthan Breweries Ltd. v. The Stroh Brewery Company 22.
In the said judgment, it was an application filed under Section 9 of
Arbitration and Conciliation Act, 1996 and on examination of the facts
of the said case, Division Bench of Delhi High Court held that
agreement in the said case is a technical know-how agreement and it was
terminated by a party, such contract is not in the nature of contract
referred under Section 14 (1) (c) of the Specific Relief Act, 1963.
Therefore, contract could be terminated by any party without assigning
22
(2020) SCC OnLine Del. 481
65
any reason. But in the present case, the facts are different. Therefore,
the principle laid down in the said judgment is not applicable to the facts
of the present case.
88. Thus, defendant cancelled Ex.A.1 agreement of sale vide
Ex.A.3 notice and forfeited the advance sale consideration contrary to
the terms of E.ex.A.1.
89. It is contended by the learned senior counsel for the defendant
that the plaintiff did not issue any reply to ExA.3 notice. However, it is
not fatal to the case of the plaintiff. Plaintiff specifically contended that
she has approached D.W.1 on receipt of Ex.A.3 notice, which fact is not
disputed by the defendant
90. Section 55 of the Indian Contract Act deals with the effect of
failure to perform at a fixed time in contract in which time is essential,
is relevant and extracted below:-
55. Effect of failure to perform at a fixed time, in contract in which time
is essential.–
When a party to a contract promises to do a certain thing at or before a
specified time, or certain things at or before specified times, and fails to
do any such thing at or before the specified time, the contract, or so
66
much of it as has not been performed, becomes voidable at the option of
the promisee, if the intention of the parties was that time should be of the
essence of the contract. Effect of such failure when time is not
essential.–If it was not the intention of the parties that time should be of
the essence of the contract, the contract does not become voidable by the
failure to do such thing at or before the specified time; but the promisee
is entitled to compensation from the promisor for any loss occasioned to
him by such failure. Effect of acceptance of performance at time other
than that agreed upon.–If, in case of a contract voidable on account of
the promisor’s failure to perform his promise at the time agreed, the
promisee accepts performance of such promise at any time other than
that agreed, the promisee cannot claim compensation for any loss
occasioned by the non-performance of the promise at the time agreed,
unless, at the time of such acceptance he gives notice to the promisor of
his intention to do so.
91. The above section deals with the effect of failure to perform at
a fixed time, in contracts in which time is essential. The question
whether time is the essence of the contract, with reference to the
performance of a contract, what generally may arise for consideration
either with reference to the contract as a whole or with reference to a
particular term or condition of the contract which is breached. In a
contract relating to sale of immovable property if time is specified for
payment of the sale price but not in regard to the execution of the sale
deed, time will become the essence only with reference to payment of
67
sale price but not in regard to execution of the sale deed. Normally in
regard to contracts relating to sale of immovable properties, time is not
considered to be the essence of the contract unless such an intention can
be gathered either from the express terms of the contract or impliedly
from the intention of the parties as expressed by the terms of the
contract.
92. On consideration of the said aspects only, more particularly
Section 55 and Section 25 of the Indian Contract Act, learned trial Court
decreed the suit filed by the plaintiff. Therefore, this point is answered in
favour of the plaintiff.
93. The contention of the learned senior counsel appearing for the
defendant that learned trial court misinterpreted Sections 55 and 25 of
the Indian Contract Act, is untenable.
Point No.5:
Whether the mutation of the property in the name of the
defendant affected the enforceability of the Agreement of Sale
dated 23.01.2003 or the rights of the plaintiff to seek specific
performance?
68
94. It is contended by the learned counsel for the defendant that
mutation proceedings relating to suit property were not completed
satisfactorily and that the same contributed to the delay in completion of
the transaction, thereby affecting the plaintiff’s readiness and
willingness. It is the contention of the plaintiff that mutation entries are
only for physical and administrative purposes and have no bearing on
title or enforceability of the agreement of sale. It is settled principle of
law that mutation in revenue record neither creates nor extinguishes title
to immovable property and does not determine ownership. The rights of
the parties over the suit schedule property arises from the agreement of
sale dated 23.01.2003 and not from the revenue entries. Therefore,
pendency or absence of mutation cannot affect the validity or
enforceability of Ex.A.1 agreement of sale. Thus, the mutation issue
does not materially impact the plaintiff’s claim for specific performance.
95. It is settled law that an agreement to sell does not by itself
create any interest of the proposed vendee in the immovable property,
but only creates an enforceable right in the parties. The said principle
was also laid down by the Apex court in Rambhau Namdeo Gajre vs
69
Narayan Bapuji Dhotra (Dead) Through L.Rs 23 and in Dharma
Naika vs Rama Naika 24
96. As discussed supra, defendant contended that its name was
mutated in the revenue record before filing of the suit. However, the said
fact was not informed to the plaintiff. The said fact was also admitted by
D.W.1. Defendant has not filed any documents in proof of the same.
Therefore, this point is answered in favour of the plaintiff.
Point No.6:
Whether the application filed by the plaintiff before the Trial
Court seeking permission to deposit the balance sale consideration
supports the plea of readiness and willingness to perform the contract?
97. It is apt to note that plaintiff has filed an application vide
I.A.No.1570 of 2005 in O.S.No.14 of 2005 seeking permission to
deposit the balance sale consideration. Learned trial Court allowed the
said application on 16.08.2005. According to the plaintiff, she has
deposited the said amount on 27.12.2006 to the credit of the said suit on
seeking extension of time to deposit.
23
(2004) 8 SCC 614
24
(2008) 14 SCC 517
70
98. It is apt to note that learned senior counsel for the defendant
contended that plaintiff did not deposit balance sale consideration in
Court in compliance with the said order. P.Ws.1 and 2 admitted the said
fact, during cross-examination. In the impugned judgment, learned trial
court specifically mentioned about deposit of the balance sale
consideration with the permission of the court. Thus, as on the date of
cross-examination of P.Ws.1 and 2, plaintiff has not deposited the said
amount in the court and deposited the same seeking extension of time.
Such conduct constitutes a relevant circumstance demonstrating the
plaintiff bona fide intention and willingness to perform the contract. It is
apt to note that without extension of time, learned trial Court will not
issue lodgment schedule for the purpose of deposit.
99. Thus, plaintiff was always ready and willing to perform her
part of contract under Ex.A.1. She has pleaded and proved the same. In
fact, it is defendant which did not perform its part of contract by getting
its name mutated in revenue record. Thus, this point is answered in
favour of the plaintiff.
71
100. It is apt to note that in Chandrakanthamma (supra) and
U.N. Krishnamurthy vs A.M.Krishnamurthy 25, the Apex Court held
that deposit of balance consideration in the court during the pendency of
the suit has no relevancy.
101. However, in the present case, the said aspect is considered as
one of the surrounding circumstances.
Point No.7:
Whether the plaintiff is entitled to the equitable and
discretionary relief of specific performance of the Agreement of
Sale dated 23.01.2003?
102. It is well settled that the relief of specific performance under
the Specific Relief Act, 1963 cannot granted as a matter of course. The
remedy is essentially equitable and discretionary in nature, and the court
must examine the conduct of the parties, the surrounding circumstances
and the overall equities of the case before granting such relief.
103. In K. Prakash v. B.R. Sampath Kumar 26, the Apex Court
held that where the agreement of sale is proved, the court is not bound to
25
(2023) 11 SCC 775
26
(2015) 1 SCC 587
72
grant specific performance automatically. The court must exercise
judicial discretion and determine whether the plaintiff has approached
the court with clean hands and whether the circumstances of the case
justify the grant of such relief. At the same time, it has also been
consistently held that contracts relating to immovable property are
ordinarily enforced through specific performance, since monetary
compensation is often inadequate to compensate for the loss of a specific
immovable property.
104. It is well settled law that where a valid agreement of sale is
established and the plaintiff has demonstrated readiness and willingness
to perform the contract, the normal rule is to grant specific performance
unless equitable considerations justify refusal of such relief.
105. In the present case, execution of the Ex.A.1 agreement of
sale dated 23.01.2003 is not in dispute. The plaintiff has paid advance
consideration under the agreement and has taken steps to enforce the
contract.
106. Further, as discussed while dealing with the earlier issues,
time cannot be treated as the essence of the contract merely on the basis
73
of the installment schedule. Possession of the property was delivered to
the plaintiff pursuant to the agreement and the said agreement was not
validly cancelled by the defendant. The plaintiff has demonstrated
readiness and willingness to perform the contract, including depositing
the balance sale consideration before the Trial Court. The contention
regarding mutation of the property does not affect the enforceability of
the agreement. These circumstances indicate that the plaintiff has acted
in a bona fide manner and has consistently attempted to enforce the
contract. On the other hand, the defendant has failed to establish that the
agreement stood validly cancelled or that the plaintiff committed such
breach as would disentitle her from seeking equitable relief.
107. The conduct of the parties and the surrounding
circumstances, therefore, tilt the balance of equities in favour of the
plaintiff. It is also relevant to note that the plaintiff has already deposited
the balance sale consideration before the Trial Court. Thus, this point is
answered in favour of the plaintiff.
74
Point No.9:
Whether, after delivering possession of the suit property to the
plaintiff pursuant to the Agreement of Sale, the defendant could
lawfully reclaim possession without first cancelling the
agreement of sale in accordance with law?
108. Clause No.3 of the agreement of sale is relevant, it is
extracted below:-
“3.The Vendor has today given possession of the said property, and legal
possession of the property shall be delivered to the purchaser at the time
of payment of entire balance of sale consideration as per the
aforementioned schedule.”
Thus, the defendant has already delivered possession of the said
property. In the said agreement, there is no clause that on cancellation of
agreement of sale, the possession of the schedule property will be re-
delivered to the defendant automatically. In the absence of the same, the
defendant cannot contend that it is in possession of the property.
109. It is also apt to note that the doctrine in Section 53-A of the
Transfer of Property Act, which protects a transferee who has taken
possession of property in pursuance of a contract and has performed or
is willing to perform his part of the contract.
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110. The essence of the doctrine of part performance is that once
the transferee has been placed in possession pursuant to the agreement,
the transferor cannot act in a manner inconsistent with the contract so as
to disturb the possession of the transferee, unless the agreement itself is
lawfully terminated.
111. In the present case, the record indicates that possession of the
property was delivered to the plaintiff under Ex.A.1 agreement of sale.
The defendant has not placed any material on record to show that the
agreement was formally rescinded or cancelled prior to the attempt to
deny the plaintiff’s rights under the agreement. In contractual
relationships of this nature, the law requires that cancellation of the
agreement must be clear, unequivocal and communicated to the other
party. Mere allegations of breach or failure to comply with contractual
terms would not automatically terminate the agreement.
112. It is also apt to note that once possession has been delivered
to the purchaser in pursuance of the agreement, the vendor cannot
unilaterally dispossess the purchaser unless the agreement has been
lawfully terminated and appropriate legal steps have been taken.
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Therefore, in the absence of any valid cancellation of the agreement of
sale, the act of reclaiming possession or acting in a manner inconsistent
with the rights of the purchaser cannot be sustained. Therefore, this is
answered in favour of the plaintiff.
113. With regard to contention of the learned senior counsel
appearing for the defendant that the suit is barred by limitation, it is apt
to note that Ex.A.1 agreement of sale was executed on 23.01.2003, the
same was cancelled on 21.03.2003, the plaintiff has filed the present suit
on 30.05.2005. Thus, suit is filed within three years from the date of
execution of Ex.A.1 agreement of sale, therefore, the said contention of
learned senior counsel appearing for defendant is untenable.
114. Further contention of learned senior counsel appearing for
the defendant that the relief of specific performance cannot be sought
when the party is at default, is also untenable in view of the aforesaid
discussion.
77
115. On consideration of the said aspects including evidence both
oral and documentary, learned trial Court decreed the suit filed by the
plaintiff for specific performance of agreement of sale.
116. It is apt to note that in Prakash Chandra vs. Angadlal and
others 27, the Apex court held that the ordinary rule is that specific
performance should be granted. It ought to be denied only when
equitable considerations point to its refusal and the circumstances show
that damages would constitute an adequate relief.
117. In K.Prakash (supra), the Apex court held that when the
trial court exercises its discretion in one way of the other after
appreciation of entire evidence and materials on record, the appellate
court should not interfere unless it is established that the discretion has
been exercised perversely, arbitrarily or against judicial principles, the
appellate Court should also not exercise its discretion against the grant
of specific performance on extraneous considerations or sympathetic
considerations.
27
(1979) 4 SCC 393
78
118. A party is not entitled to get a decree for specific
performance merely because it is lawful to do so as contemplated under
Section 20 of the Act, 1963. Once an agreement to sell is legal and
validly proved and further requirements for getting such a decree are
established, the court has to exercise its discretion in favour of granting
relief for specific performance. Subsequent rise in the price will not be
treated as a hardship entailing refusal of decree for specific
performance. Rise in price is a normal change of circumstances and,
therefore, on that ground a decree for specific performance cannot be
reversed. The said principle was also laid down in K.Prakash Chandra
(supra).
119. On consideration of the said aspects only, learned trial court
decreed the suit filed by the plaintiff seeking specific performance of the
agreement of sale. It is a reasoned judgment and well-founded.
Defendant herein failed to make out any case to interfere with the said
judgment and decree. Therefore, this appeal is liable to be dismissed and
accordingly dismissed.
79
Consequently, miscellaneous petitions, if any pending, in this
appeal, shall stand closed.
________________________
JUSTICE K. LAKSHMAN
__________________________________
JUSTICE B.R MADHUSUDHAN RAO
Date:22.04.2026
Note: L.R.copy to be marked.
b/o.vvr.
