Court’s decision
The Bombay High Court has dismissed a second appeal challenging concurrent findings of two courts that refused specific performance of an agreement for sale of a residential flat. The Court held that although time is ordinarily not the essence of contracts for sale of immovable property, a purchaser must still establish continuous readiness and willingness to perform contractual obligations. It ruled that the purchaser’s insistence on obtaining a housing society’s consent—despite admitting that such consent was not legally necessary—amounted to insisting on performance of an impossibility, undermining the claim for specific performance. Consequently, no substantial question of law arose for consideration.
Facts
The dispute concerned an agreement for sale of a residential flat with an attached parking space situated on a prominent residential road in Pune. The owners agreed to sell the flat for ₹50 lakh, of which ₹1 lakh was paid as earnest money. A further sum of ₹30 lakh was later paid and acknowledged by a registered receipt, subject to the sellers obtaining consent from the cooperative housing society for transfer. As the society did not grant consent, proceedings were initiated before the Deputy Registrar of Cooperative Societies. Ultimately, the sellers refunded the ₹30 lakh and executed a supplementary registered agreement recording that the balance consideration would be paid only if society consent was obtained. When consent remained unavailable, the sellers terminated the agreement and offered to return the earnest money. Nearly two years later, the purchaser issued a legal notice and instituted a suit seeking specific performance.
Issues
The principal issues before the High Court were whether the purchaser had established continuous readiness and willingness to perform his part of the contract, whether delay in seeking specific performance—though within limitation—could be considered against the purchaser, and whether insistence on obtaining housing society consent, despite its admitted non-requirement in law, disentitled the purchaser to discretionary relief. The Court also examined whether these questions gave rise to any substantial question of law warranting interference in second appeal.
Petitioner’s arguments
The appellant-purchaser argued that both the trial court and the first appellate court committed serious errors in law by holding that he lacked readiness and willingness. It was submitted that payment of a substantial amount of ₹30 lakh demonstrated unequivocal intent and financial capacity to complete the transaction. The subsequent refund of this amount, according to the appellant, occurred solely due to the sellers’ inability to secure society consent, a condition expressly stipulated in the agreement. The appellant further contended that the suit was filed well within the statutory period of limitation and that delay, by itself, could not defeat a claim for specific performance. Reliance was placed on multiple Supreme Court judgments reiterating that time is not ordinarily the essence of contracts for sale of immovable property.
Respondent’s arguments
The respondents-sellers opposed the appeal, contending that the findings of fact recorded by both courts were sound and based on evidence. They argued that the purchaser was aware that society consent was not legally mandatory for transfer, yet continued to insist on it and accepted refund of ₹30 lakh, thereby demonstrating reluctance to complete the transaction. It was submitted that after termination of the agreement in April 2008, the purchaser neither tendered the balance consideration nor took any steps to complete the sale, remaining inactive for almost two years. This conduct, according to the respondents, clearly negatived readiness and willingness and did not raise any substantial question of law.
Analysis of the law
The High Court revisited settled principles governing suits for specific performance. It reiterated that while time is generally not the essence of contracts for sale of immovable property, courts may infer otherwise from express terms, surrounding circumstances, or the nature of the transaction. More importantly, even where time is not of the essence, a plaintiff must continuously demonstrate readiness and willingness to perform contractual obligations. Delay, though within limitation, can still be relevant in exercising equitable discretion, particularly where conduct suggests waiver, acquiescence, or inequity in granting relief.
Precedent analysis
The Court analysed leading Supreme Court authorities, including Supreme Court of India decisions explaining readiness and willingness in specific performance suits. It noted that while earlier judgments emphasised that delay within limitation cannot automatically defeat a claim, later decisions clarified that courts must examine surrounding circumstances and conduct of parties. Authorities such as Chand Rani, K.S. Vidyanandam, and Saradamani Kandappan were discussed to underline that contractual timelines and insistence on conditions must be assessed contextually. These precedents were applied to hold that insistence on an unnecessary and impossible condition can justify refusal of specific performance.
Court’s reasoning
Applying these principles, the High Court found that the sellers had taken all reasonable steps to obtain society consent, including approaching statutory authorities, but failed due to circumstances beyond their control. The purchaser admitted in cross-examination that society consent was not legally required for transfer. Despite this knowledge, the purchaser insisted on such consent and accepted refund of ₹30 lakh, instead of offering to complete the transaction by paying the balance consideration. The Court treated this insistence as demanding performance of an impossibility, reflecting lack of genuine willingness. The prolonged inaction between April 2008 and March 2010 further reinforced this conclusion. The Court therefore held that both lower courts rightly exercised discretion against granting specific performance.
Conclusion
The second appeal was dismissed. The High Court held that no substantial question of law arose, as the concurrent findings on readiness and willingness were based on evidence and correct legal principles. The refusal of specific performance was upheld. While declining to continue interim protection, the Court directed refund of the ₹1 lakh earnest money to the purchaser, in view of the sellers’ consent, without prejudice to parties’ rights.
Implications
This judgment reinforces that in specific performance litigation, courts will scrutinise not only contractual terms but also the conduct of parties. Purchasers cannot insist on conditions that are legally unnecessary or impossible to perform and still seek equitable relief. Even when suits are filed within limitation, prolonged inaction and insistence on untenable conditions may defeat claims of readiness and willingness. The ruling offers clarity for property transactions involving cooperative housing societies and underscores the discretionary nature of specific performance.
Case law references
- Chand Rani v. Kamal Rani: Held that time is not ordinarily the essence in immovable property sales, but intention may be inferred from circumstances; applied to contextual analysis.
- K.S. Vidyanandam v. Vairavan: Clarified that mere filing within limitation does not guarantee specific performance; relied on to assess conduct.
- Saradamani Kandappan v. S. Rajalakshmi: Recognised that stipulated timelines may become essential depending on circumstances; used to evaluate delay.
- Motilal Jain v. Ramdasi Devi: Explained relevance of delay and equity in specific performance suits; principles applied to deny relief.
FAQs
Q1. Can a court refuse specific performance even if the suit is filed within limitation?
Yes. Courts may refuse specific performance if the plaintiff fails to prove continuous readiness and willingness or if equity does not favour granting relief.
Q2. Is housing society consent mandatory for sale of a flat?
Not always. Where consent is not legally required, insisting on it may weaken a purchaser’s claim for specific performance.
Q3. Does paying a large advance guarantee specific performance?
No. Payment of advance alone is insufficient; the purchaser must show consistent willingness and ability to complete the transaction.