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Ayillyath Yadunath Nambiar vs. P. Sreedharan

Civil Appeal · 2022 INSC 843Decided 18 Aug 2022
Civil Appeal No. 4943 of 2022
Hemant Gupta · Vikram Nath

Background

A property owner, needing cash urgently, agreed in January 2005 to sell two plots of land to a buyer for a total price of about Rs. 64.6 lakh, with the buyer paying Rs. 50 lakh in advance and the sale deed to be executed within four months. When the seller later denied ever signing the agreement or receiving any money, the buyer sued for specific performance (i.e., to force the sale to go through). The trial court found the agreement genuine and decreed specific performance in the buyer's favour, but the Kerala High Court, while also finding the agreement genuine, refused to order the actual sale and instead directed the seller to merely refund the Rs. 50 lakh advance with 12% annual interest, citing several suspicious circumstances surrounding the deal (a huge cash payment with no cheque/bank trail, competing criminal complaints of fabrication filed by both sides, doubts about possession, and an interested scribe who took commission from both parties).

Decision Breakdown

Both the buyer (wanting the sale enforced) and the seller (wanting the whole suit dismissed) appealed to the Supreme Court. The Court held that even though the underlying agreement was genuinely executed, specific performance is a discretionary equitable remedy, not an automatic entitlement, and the numerous suspicious circumstances identified by the High Court (in its detailed ten-point analysis) were legitimate grounds to decline that discretionary relief while still doing justice by ordering repayment of the advance with substantial interest. Finding the High Court's reasoning sound and its balancing of the equities appropriate, the Supreme Court declined to interfere with either the buyer's appeal (seeking the property) or the seller's appeal (seeking outright dismissal), and dismissed both appeals.

Lesson Learnt

Courts can refuse to order specific performance of a property sale agreement, even one proven genuine, where the surrounding facts raise real doubts about the transaction's fairness or transparency, and will instead order monetary compensation (refund with interest) as a fair substitute remedy.

Official source (sci.gov.in)View Judgment (PDF)

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