Failure to prove financial capacity and means to pay balance consideration defeats a claim for specific performance.

The Plaintiff (Appellant) entered into a Sale Agreement (Ex-A.1) dated July 24, 2014, with the 1st Defendant to purchase the Suit Property for Rs. 14,00,000, paying an advance of Rs. 3,00,000.

The Plaintiff alleged he was ready and willing to pay the balance, but the Defendant failed to execute the Sale Deed, leading to a suit for Specific Performance.

The Defendant contended that the Agreement was merely a security for a loan transaction involving the Plaintiff and the Plaintiff's father (a tenant/mortgagee of the property) and was not intended for sale.

The Trial Court dismissed the prayer for Specific Performance, holding the agreement was for security, but ordered a refund of the advance.

1. Whether Ex-A.1 - Sale Agreement was a genuine contract for sale or merely executed as security for a loan transaction?

2. Whether the Plaintiff proved his readiness and willingness to perform his part of the contract as required under Section 16(c) of the Specific Relief Act?

3. Whether the Trial Court's judgment regarding the nature of relief and interest awarded requires interference?

The Court applied Section 16(c) of the Specific Relief Act, 1963, which mandates that a plaintiff must aver and prove continuous readiness and willingness to perform the contract.

It interpreted the proviso to Section 49 of the Registration Act, 1908, confirming that an unregistered agreement of sale is admissible as evidence in a suit for specific performance, relying on the Supreme Court precedent in *R. Hemalatha v. Kasthuri*.

Furthermore, the court looked at the evidentiary value of admissions in correspondence under the Indian Evidence Act to determine the true nature of the transaction.

The High Court overturned the Trial Court’s finding on the nature of the agreement.

It noted that while the Defendant claimed the document was for security, his own legal notice (Ex-B.1) explicitly admitted that he had agreed to sell the property for Rs. 14 lakhs and received Rs. 3 lakhs as advance.

Consequently, the Court held Ex-A.1 was a valid sale agreement.

However, regarding Specific Performance, the Court found the Plaintiff failed to meet the evidentiary burden of "readiness and willingness."

The Plaintiff produced no bank statements or financial documents to prove he possessed the balance of Rs. 11,00,000 during the contract period.

While a physical deposit in court isn't always mandatory, the capacity to pay must be demonstrated; absence of such proof precludes the discretionary relief of specific performance.

It held that while Ex-A.1 was a genuine sale agreement, the Plaintiff was not entitled to Specific Performance due to failure to prove financial readiness.

The Court modified the Trial Court's decree regarding the alternative relief: the 1st Defendant was ordered to refund the advance of Rs. 3,00,000 with 12% interest per annum from the date of the suit until realization.

The Trial Court's grant of interest from the date of the agreement was set aside as there was no contractual provision for the same.

No costs were awarded.