Specific Relief Act | Buyer's Delay In Issuing Legal Notice To Seller Not Ground To Deny Specific Performance : Supreme Court

The Supreme Court has observed that mere delay in issuance of a legal notice to the defendant to receive the balance consideration and execute the sale deed could not be treated against the plaintiff as his lack of readiness and willingness to perform the contract.

A bench of Justice Sanjay Karol and Justice Vipul M. Pancholi heard the case where despite making a payment of 93% of the sale consideration amount to the Respondent-defendant and repeatedly asking the Respondent-defendant to execute the sale deed and receive the balance sale consideration, the Appellant-plaintiff was treated as lacking readiness and willingness to perform a contract, as there was a delay in issuing a legal notice by him to the Respondent-defendant.

Briefly put, an agreement to sell dated 19.03.2010 was entered into between the Appellant and Respondent for the purchase of the property for a total sale consideration of Rs.9,30,000/-, out of which a sum of Rs.9,00,000/- was paid as earnest money. The balance amount of Rs.30,000/- was agreed to be paid at the time of execution of the sale deed, within four months, i.e., by July.

According to the plaintiff, he was always ready and willing to perform his part of the contract and, in July 2010, i.e., after expiry of four months, had approached the defendant(s) to complete the sale transaction; however, they sought further time. In December 2010, when the plaintiff again insisted on the execution of the subject sale agreement, the defendant(s) allegedly became evasive and demanded more money, and when the plaintiff refused, they threatened to alienate the property to a third party. As a result, the plaintiff issued a legal notice dated 01.02.2011, calling upon the defendant(s) to receive the balance consideration and execute the sale deed in accordance with the agreement. Since no reply thereto was furnished, the plaintiff instituted a civil suit, seeking specific performance of the Agreement to Sell.

The trial court decreed the suit in the Appellant's favour, which remained undisturbed by the First Appellate Court, however, in a Second Appeal filed by the Respondent-Defendant, the High Court treated the Appellant's failure to issue the legal notice within the contractually stipulated time as his lack of readiness and willingness to perform the contract under Section 16(c) of the Specific Relief Act, 1963 (“SRA”), prompting the plaintiff to appeal to the Supreme Court.

Setting aside the Madras High Court's judgment, the judgment authored by Justice Karol observed that the High Court had gone into the technicality of the case by giving primacy to the non-issuance of the legal notice within the contractually stipulated time, without averring to the attending circumstances and overall conduct of the plaintiff, who had deposited Rs. 9 Lakhs out of a total sale consideration of Rs. 9.3 Lakhs.

“Merely because the legal notice came to be issued after expiry of four months from the stipulated period mentioned in the agreement, the same by itself cannot lead to an inference that the plaintiff was not ready and willing to perform the contract, especially when the suit itself was instituted well within the prescribed period of limitation. The readiness and willingness of the plaintiff must be assessed in light of the overall conduct of the parties and the attending circumstances of the particular case.”, the Court observed.

The Court essentially said that mere delay in sending the legal notice would not be fatal to the plaintiff's case, as his overall conduct proved his readiness and willingness to perform the contract. Contrastingly, the Court found the defendant's conduct to be not inspiring confidence, as he neither issued any reply to the Appellant's legal notice, nor honoured his part of the contractual obligations.

“It is also pertinent to note that despite admittedly receiving the legal notice, the defendant(s) failed to issue any reply denying the agreement or disputing the assertions made by the plaintiff therein. An adverse inference, therefore, arises against the defendant(s), particularly when the defence sought to be raised appears to be an afterthought. In view of the above discussion, we are of the considered opinion that the plaintiff has sufficiently established continuous readiness and willingness within the meaning of Section 16(c) SPA 1963.”, the Court said.

When Filing of Suit Was Within Limitation, Delay In Sending Legal Notice Not Relevant

The Court noted that since the Appellant-plaintiff had instituted the civil suit seeking specific performance of the agreement to sell within the three-year limitation, therefore, a mere delay in issuing legal notice would not be relevant.

In this regard, the Court cited the excerpt from R. Lakshmikantham v. Devaraji, (2019) 8 SCC 62, where it was held that when the suit for specific performance is filed within the period of limitation, delay cannot be put against the plaintiff.

“In England there is no period of limitation for instituting a suit for the said relief and, therefore, mere delay—the time lag depending upon circumstances—may itself be sufficient to refuse the relief; but, in India mere delay cannot be a ground for refusing the said relief, for the statute prescribes the period of limitation. If the suit is in time, delay is sanctioned by law; if it is beyond time, the suit will be dismissed as barred by time; in either case, no question of equity arises.”, the court quoted from Mademsetty Satyanarayana v. G. Yelloji Rao, AIR 1965 SC 1405.

In terms of the aforesaid, the appeal was allowed, and the trial court's decision decreeing the suit in the Appellant's favour was restored.

Cause Title: A. SHAHUL HAMEED Versus N. MALLIGARJUNA AND ORS.

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Appearance:

Ms. Parul Shukla, Amicus Curiae

For Petitioner(s) : Mr. Aljo K. Joseph, AOR Mr. Rajnish Kumar, Adv. Mr. Rajesh Kumar, Adv. Mr. N Leela Vara Prasad, Adv. Ms. Ishita Singh, Adv. Mr. Surit Chaubey, Adv.

For Respondent(s) : Mrs. Prabha Swami, Adv. Ms. Divya Swami, Adv. Mr. Nikhil Swami, AOR