Specific performance requires continuous readiness and willingness; inconsistent conduct and unclean hands justify its refusal.

The appellant, owner of the suit property at Udhagamandalam, entered into an agreement to sell dated 01.04.2004 with Respondent No. 1 for ₹2.25 crore.

The agreement required completion of the sale within sixty days of the setting aside of an ex parte preliminary decree in a pending partition suit, and stipulated that time was of the essence.

The respondents claimed to have paid ₹85 lakh as advance; the appellant acknowledged ₹60 lakh and disputed the balance.

Respondent No. 2, Respondent No. 1’s husband and attorney of the appellant, subsequently entered into a sub-agreement with Respondent No. 6 for sale of the property and received ₹10 lakh, leading to revocation of the power of attorney.

After the partition decree was set aside, the appellant called upon the respondents to pay the balance consideration, but thereafter terminated the agreement alleging breach.

The respondents instituted a suit for specific performance, or alternatively refund of the advance with interest and a charge over the property.

The Trial Court refused specific performance on the grounds of lack of continuous readiness and willingness and the respondents’ inconsistent conduct, but decreed refund of ₹85 lakh with 15% interest and created a charge over the property.

The High Court reversed the refusal of specific performance and directed completion of the sale upon deposit of ₹1.40 crore.

The Court applied Section 16(c) of the Specific Relief Act, 1963, under which a plaintiff seeking specific performance must plead and prove continuous readiness and willingness to perform the essential contractual obligations.

It applied Section 20 of the unamended Specific Relief Act, under which specific performance was discretionary and equitable, requiring consideration of the parties’ conduct, surrounding circumstances, hardship, and availability of alternative relief.

The Court relied on N.P. Thirugnanam v. Dr. R. Jagan Mohan Rao, Nanjappan v. Ramasamy, Kamal Kumar v. Premlata Joshi, and Major Gen. Darshan Singh v. Brij Bhushan Chaudhary for these principles.

On maintainability, Annamalai v. Vasanthi, read with I.S. Sikandar v. K. Subramani, Mrs. A. Kanthamani v. Mrs. Nasreen Ahmed, and R. Kandasamy v. T.R.K. Sarawathy, establishes that a declaration is necessary where a valid contractual cancellation creates a cloud over the agreement; however, where termination is merely unilateral repudiation without contractual authority, the plaintiff may treat it as ineffective and sue for specific performance, particularly where the issue has been tried.

Under Order XLI Rule 22 CPC, a respondent supporting the decree may challenge an adverse finding without cross-objections if no additional relief is sought.

The Court also recognised that a plaintiff seeking equitable relief must approach the court with clean hands and cannot rely on materially inconsistent positions.

The Court held that the agreement contained no contractual power permitting the appellant to terminate it unilaterally; the termination therefore amounted to repudiation, and the respondents were not required to seek a separate declaration, especially since the Trial Court had framed and adjudicated the issue of termination.

However, the respondents failed to establish continuous readiness and willingness.

The dishonour of cheques for want of sufficient funds, the absence of proof that the subsequent memorandum of understanding generated funds before the suit was filed, and the fact that the relevant property was ultimately sold only in 2006 showed that the respondents lacked the financial means when the suit was instituted.

The demand draft produced by the respondents before the High Court in 2011 could not establish readiness from the date of the agreement through the date of decree.

The Court further found that Respondent No. 2’s criminal complaint sought recovery of ₹85 lakh on the basis that the amount had been fraudulently obtained, while the civil suit sought enforcement of the same transaction; this constituted impermissible “hot and cold” conduct.

The respondents had also adopted inconsistent positions regarding whether their rights had been assigned to Respondent No. 6, and Respondent No. 1 neither entered the witness box nor disowned her husband’s conduct.

These circumstances, together with the more than two-decade delay and the appellant’s advanced age, made specific performance inequitable and justified restoration of the parties to their pre-transaction position.

The Supreme Court set aside the High Court’s decree for specific performance and restored the Trial Court’s decree directing refund of ₹85 lakh with 15% interest and securing the amount by a charge over the suit property.

The respondents were permitted to withdraw the ₹1.40 crore deposited pursuant to the High Court’s order, together with accrued interest.

There was no order as to costs.