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U.N. Krishnamurthy (Since Deceased) Thr. L.Rs. vs A.M. Krishnamurthy

Civil Appeal · 2022 INSC 714Decided 12 Jul 2022
Civil Appeal No. 4703 of 2022
Indira Banerjee · Hrishikesh Roy

Background

The respondent (plaintiff) claimed that the appellant's predecessor, the original owner of a property, orally agreed in November 2002 to sell it to him for Rs. 15,10,000, with a small advance paid and the balance to be paid by 15 March 2003. When the owner allegedly refused to execute the sale deed, the respondent sent a legal notice in February 2003 asserting he was ready and willing to perform, but did not file a suit for specific performance until October 2005, nearly three years later, and deposited the balance sale consideration in court only in 2010. Both the Trial Court and the Madras High Court ruled in the respondent's favour and decreed specific performance.

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, including having the funds available, not merely make a bare averment to that effect. It found that the respondent waited nearly three years to sue after asserting readiness, and his own balance sheet showed he lacked sufficient funds in 2003 to pay the balance consideration; depositing money in court seven years later did not cure this deficiency. Relying on precedents including Saradamani Kandappan and Umabai v. Nilkanth Dhondiba Chavan, the Court held that time-limits fixed in an agreement, even if not "of the essence," cannot be ignored, and courts must scrutinise readiness and willingness strictly. It therefore set aside the High Court and Trial Court judgments, directed return of the earnest money with 7% interest, and allowed the respondent to withdraw his court deposit.

Lesson Learnt

In a suit for specific performance of a property sale agreement, merely filing within the three-year limitation period is not enough: a buyer must show, with real evidence (including proof of available funds), that he was continuously ready and willing to complete the purchase; unexplained delay in suing and depositing money can defeat the claim.

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

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