Legal Updates

Supreme Court: Readiness and Willingness Essential for Specific Performance of Contract

In the case of “R. Shama Naik v. G. Srinivasiah”, the Supreme Court of India (“SC”) ruled that plaintiffs seeking Specific Performance of Contract must strictly prove financial financial readiness and willingness to perform the contract.

Case Background: R. Shama Naik v. G. Srinivasiah

Petitioner/Buyer made an agreement in 2005 to buy a property for INR 30 lakhs and paid INR 12.5 lakhs as advance. It was contended by the Petitioner that he was always ready and willing to perform his part of the contract but it was the Respondent/Seller who was not inclined to execute the sale deed despite accepting the amount of Rs 12,50,000 towards earnest money.

The Petitioner instituted the original suit in trial court in 2008, seeking Specific Performance of Contract as a remedy and emphasizing Contract Enforcement, or alternatively, Claiming refund of the advance. The trial court passed judgment in favor of Petitioner and ordered the seller to complete the sale.

The Respondent filed for appeal before the Karnataka High Court (“High Court”).

High Court concluded that there was no concrete proof from the petitioner about his financial capability at the relevant time to perform the contract. The High Court found that the petitioner did not provide sufficient evidence to demonstrate that he was financially capable of completing the payment.

The HC determined that the petitioner did not show consistent conduct or actions to demonstrate that he was actively seeking to perform the contract. The mere fact that the Petitioner had paid advance money was not considered sufficient proof of willingness.

Thus, the High Court overruled the decision of the Trial Court and held that the Petitioner failed to prove they were “ready” and “willing”.

Section 16(C) of the Specific Relief Act, 1963) bars the relief of the specific performance of a contract in favour of a person who fails to aver readiness and willingness to perform his part of the contract.

Subsequently, the Petitioner filed for a Special Leave Petition (“SLP”) before the Apex court.

Supreme Court’s Judgment:

In cases involving Specific Performance of Contract SC noted that the law is well-settled on the requirement for readiness and willingness to seek specific performance of a contract under Section 16(c) of the Specific Relief Act, 1963. The Court emphasized that both readiness and willingness are crucial for granting specific performance.

SC observed that the High Court, in its first appeal, had carefully appreciated both oral and documentary evidence presented by the Parties. The High Court found that the Petitioner had failed to prove his readiness and willingness to perform his part of the contract.

SC upheld the decision of High Court, stating that the judgment was based on a proper appreciation of facts and evidence. The findings on readiness and willingness were factual in nature, and since they were not found to be perverse or incorrect, there was no ground for the Supreme Court to interfere with the judgment of High Court.

Since, the High Court’s decision was based on established legal principles and factual findings that were not erroneous, SC dismissed the SLP filed by the Petitioner, thereby upholding the High Court’s decision to quash the trial court’s decree for specific performance.