Unregistered sale agreements are admissible for specific performance; subsequent payment acceptance waives time as essence of contract.

The respondent (plaintiff) entered into a sale agreement on 14.09.2015 (Ex.A1) with the appellants (defendants) to purchase the suit property at Rs. 6,00,000 per acre, totaling Rs. 58,08,000.

An initial advance of Rs. 20,00,000 was paid with a three-month deadline for the balance.

On 18.12.2015, a second agreement (Ex.A2) was executed, and the appellants accepted a further advance of Rs. 10,00,000, extending the performance time to January 2016.

Despite the respondent’s notice of readiness, the appellants issued a reply notice on 20.04.2016 refusing execution, claiming the respondent lacked funds and that the advance was forfeited.

The respondent filed O.S. No. 23 of 2016 for specific performance.

The Trial Court decreed the suit in favor of the respondent on 06.08.2018.

1. Whether the respondent was ready and willing to perform his part of the agreements?

2. Whether time was the essence of the agreement?

3. Whether the unregistered sale agreements were admissible in evidence?

The court applied the criteria for granting specific performance as established in Kamal Kumar v. Premlata Joshi and Others (2019) 3 SCC 704, which requires a valid contract, continuous readiness and willingness, and an assessment of equity and hardship.

It referenced Article 54 of the Limitation Act, 1963, which sets a three-year limitation period for specific performance from the date of performance or refusal.

Crucially, the court applied the Proviso to Section 49 of the Registration Act, 1908, which stipulates that an unregistered document affecting immovable property may be received as evidence of a contract in a suit for specific performance.

The court determined that time was not the essence of the contract because the appellants accepted a substantial additional advance of Rs. 10,00,000 after the initial three-month period had expired, thereby waiving the original timeline.

The court also noted that the appellants failed to fulfill their contractual obligation to measure the land and fix boundaries.

On the issue of readiness and willingness, the respondent's bank statement (Ex.A7) proved he possessed sufficient funds (between Rs. 33,00,000 and Rs. 72,00,000) during the relevant periods.

The court highlighted that the respondent deposited the entire balance consideration of Rs. 28,08,000 into the court on 12.07.2017—prior to the filing of the written statement—which served as conclusive evidence of his readiness.

Regarding the lack of registration, the court held that under the Section 49 proviso of the Registration Act, the documents remained admissible for seeking specific performance.

The court held that the agreements were valid and binding, the respondent had successfully demonstrated continuous readiness and willingness to perform the contract, and the suit was filed within six months of the refusal, well within the limitation period.

The appellants were directed to execute the sale deed as per the terms of the agreement.