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Civil Property & InheritanceSupreme Court of India

Vijay Kumar & Ors. v. Om Parkash

Civil Appeal · 2018 INSC 927Decided 3 Oct 2018
Civil Appeal No. 10191 of 2018
Justice R. Banumathi · Justice Indira Banerjee

Background

The seller (appellant) and buyer (respondent) entered into an agreement to sell a shop for Rs. 26 lakhs in 2007, with Rs. 4 lakhs paid as earnest money and the balance of Rs. 22 lakhs due on a fixed date when the sale deed was to be registered; on that date both parties went to the Sub-Registrar's office, but the deed was not executed. The buyer then sued for specific performance, and the Trial Court dismissed the suit, finding the buyer had failed to prove he was ready and willing to pay the balance amount. On appeal, the First Appellate Court reversed this and granted specific performance, a decision the High Court affirmed, prompting the sellers to appeal to the Supreme Court.

Decision Breakdown

The Supreme Court held that a plaintiff seeking specific performance must prove continuous readiness and willingness to perform his part of the contract, and here the buyer could not show he actually had the capacity to pay the remaining Rs. 22 lakhs at the relevant time: he could not name the friends from whom he claimed to have borrowed money, nor produce any bank passbook, account book, or similar document to substantiate his claimed financial capacity. Since specific performance is a discretionary relief, and the First Appellate Court and High Court had failed to properly examine this capacity-to-pay issue before reversing the Trial Court, the Supreme Court agreed with the Trial Court's original finding that the buyer had not proved readiness and willingness, and set aside the orders granting specific performance. As the equitable outcome, the Court directed that the seller must refund the Rs. 4 lakh earnest money with interest (12% per annum up to the date of the judgment, 10% thereafter until paid), and that the buyer could withdraw the Rs. 22 lakhs he had deposited with the First Appellate Court along with any accrued interest.

Lesson Learnt

To win a court order forcing someone to complete a property sale (specific performance), a buyer must concretely prove, with real financial records, not just verbal claims, that they always had the money ready to pay; vague claims of having borrowed from unnamed friends are not enough.

Vijay Kumar & Ors. v. Om Parkash – Legal Case Shots | LegalAware