REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.      2244        OF 2018 (Arising out of Special Leave Petition (C) No.28275 of 2014)

Kalawati (D) Through  LRs. & Ors.           ...Appellants

versus

Rakesh Kumar &  Ors.                  ...Respondents

J U D G M E N T

Madan B. Lokur, J.

1. Leave granted.

2. “Ease of business” and “enforcement of contract” are the two new

buzzwords and rightly so. For ease of doing business insofar as justice

delivery  is  concerned,  it  is  time  to  introspect  and  introduce  case

management  programmes  to  streamline  the  system  so  that  suits  and

appeals can be decided more efficiently. The present appeal exemplifies

the need for case management system.

3. The subject matter of the appeal is an agreement to sell dated 29 th

May, 1986.  A suit was filed by the plaintiff (Rakesh Kumar) in the Delhi

High Court being Suit No.1193 of 1987 for specific performance of the

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agreement  to  sell.   It  appears  that  due  to  a  change  in  pecuniary

jurisdiction,  the  suit  was  transferred  to  the  District  Courts  and  was

re-numbered as Suit No.642 of 2001.  A disturbing feature of the appeal is

that even about 31 years later, the parties are not quite sure about the fate

of the agreement to sell entered into in 1986.  The period is extremely

long and such a lapse of time for the enforcement (or otherwise) of a

contract is good reason to re-think the procedures.        

4. The  appellants  (Kalawati  and  others)  are  aggrieved  by  the

judgment  and  decree  dated  10th December,  2013  passed  by  a  learned

Single Judge of the Delhi High Court in R.F.A. No.521 of 2004.

5. In  the  plaint  filed  by  the  respondent  (Rakesh  Kumar),  it  was

averred that he had entered into an agreement to sell on 29th May, 1986 in

respect of land in Rectangle No.81, Killa Nos.21/1 (1-2), 22/1 (4-5), 19/2

(4-0),  19/1 (0-12),  20/2 (1-2)  in  all  measuring 11 bighas and 1 biswa

situated in Village Mehrauli, Tehsil Mehrauli, New Delhi. A part of the

land was under the absolute ownership/bhumidari of Kalawati while the

rest of the land was in the absolute ownership/bhumidari of defendant

Nos.2 to 4 (Bishan Prakash, Om Prakash and Ved Prakash).

6. As per the agreement to sell, the sale price of the land in dispute

was  Rs.1,32,000/-  per  acre.   An  amount  of  Rs.30,000/-  was  paid  by

Rakesh Kumar to the defendants as advance payment and part payment

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towards the sale price for which a receipt was given to him.

7. According to Rakesh Kumar, the defendants were obliged to obtain

a certain ‘no objection certificate’ from the appropriate authority for sale

of the disputed land and also permissions and clearances but they failed

to take any interest in this regard. Accordingly, Rakesh Kumar issued a

lawyer’s notice dated 16th May, 1987 to the defendants to carry out their

obligations but they failed to do so.

8. Faced with this  situation,  Rakesh Kumar  filed  a  suit  before the

High Court being Suit No. 1193 of 1987. As mentioned above, the suit

was transferred to the District Courts and renumbered as Suit No.642 of

2001.  The  prayer  in  the  suit  was  for  specific  performance  for  the

agreement to sell dated 29th May, 1986 and for possession of the land in

dispute.  Along with the plaint, an application was filed by Rakesh Kumar

under Order XXXIX of the Code of Civil  Procedure for an injunction

against alienation of the land in dispute, in which notice was issued to the

defendants  therein.   Rakesh Kumar  was granted  an  interim injunction

subject to his depositing the balance sale consideration for restraining the

defendants from alienating the land in dispute.  It has come on record that

Rakesh Kumar did not deposit the balance sale consideration.

9. At this stage, it may be mentioned that during the pendency of the

suit, the defendants transferred the land in dispute in 1995 to defendant

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Nos.5,  6  and  7  and  that  is  why  the  purchasers  were  impleaded  as

defendants in the suit.

10. The parties filed their written statements to the plaint and the stand

taken by the defendants was that the sale consideration of Rs.1,32,000/-

per acre was ridiculously low and illusory. Additionally, Rakesh Kumar

himself was not ready and willing to perform his part of agreement and

therefore  no  relief  could  be  granted  to  him.  It  was  also  averred  that

Rakesh  Kumar  did  not  have  the  necessary  finances  to  pay  the

consideration  amount  and  so  was  not  prepared  to  have  the  sale  deed

executed in his favour.

11. On the pleadings before him, the Trial Judge framed several issues

but we are only concerned with the issue whether the plaintiff (Rakesh

Kumar) was at  all  times ready and willing to perform his  part  of  the

agreement. This issue was answered in the negative by the Trial Judge

and against Rakesh Kumar resulting in the dismissal of the suit. Among

the reasons given by the Trial Judge for coming to the conclusion that

Rakesh Kumar was not ready and willing to execute the contract, at all

times,  was that at the time of grant of interim injunction prayed for by

Rakesh Kumar in an application under Order XXXIX of Code of Civil

Procedure while the suit was pending in the High Court, he was required

to deposit the balance consideration as a pre-condition for restraining the

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defendants from selling, mortgaging, alienating or otherwise parting with

possession with the land in dispute. The balance sale consideration was

not  deposited  by  Rakesh  Kumar  and  therefore,  the  interim injunction

prayed for  by  him was not  granted.  In  the  absence  of  any  injunction

against  alienating  the  land  in  dispute,  the  defendants  transferred  it  to

defendant Nos.5, 6 and 7 in 1995.

12. The Trial Judge also noted that from his cross-examination it was

evident  that  Rakesh  Kumar  did  not  have  the  resources  and  sufficient

money to purchase the disputed land.  He was in possession of only one

truck and was earning Rs.10,000/- per month.  He was not assessed to

income tax and he filed his income tax return for the first time in 1994.

Earlier in 1988-89, he had opened a bank account but never had a balance

of more than Rs.52,000/- in his bank account. Sometime in July, 2002

Rakesh  Kumar  took  a  loan  of  Rs.3.15  lakhs  for  the  purpose  of  his

business from his cousin but the loan was not taken for the purpose of

buying the land in dispute. Taking all these factors into consideration, the

Trial Judge held that Rakesh Kumar did not have the means to pay the

balance consideration and was not ready and willing to perform his part

of the contract at all times.

13. Feeling aggrieved, Rakesh Kumar preferred a Regular First Appeal

before the Delhi High Court. The High Court addressed itself only to the

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question whether Rakesh Kumar was ready and willing to execute his

part of the agreement to sell, at all times. The High Court took the view

that  rather  than  Rakesh  Kumar,  it  was  the  defendants  who  were  not

willing to execute the sale deed. The High Court came to this conclusion

on the basis of the requirement in terms of the agreement to sell that the

defendants  were  obliged  to  obtain  a  ‘no  objection  certificate’  for

executing the sale deed but they had not taken any steps in that regard.

The High Court also relied on the affidavit by way of evidence filed by

Rakesh Kumar about his capacity to pay the balance sale consideration. It

was also noted by the High Court that the lawyer’s notice sent by him on

16th May, 1987  had  not  been  responded  to  by  the  defendants.   On  a

consideration of these factors, it was clear that the defendants were not

interested in executing the sale deed.

14. On  the  other  hand,  as  far  as  Rakesh  Kumar’s  readiness  and

willingness to execute the sale deed is concerned, the High Court noted

that in his cross-examination recorded on 4th October, 2002 he explained

that just prior to the date of entering into the agreement to sell, he had

disposed  of  his  house.  Thus,  he  had  sufficient  funds  available  for

investing and on this basis, he had agreed to purchase the land in dispute.  

15. The High Court  noted  that  even though Rakesh Kumar  did  not

deposit the balance consideration for the grant of injunction in his favour,

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that was of no consequence and could not be held against him.  We agree

with the High Court only to this limited extent.

16. Taking all these factors into consideration, the High Court reversed

the  view  of  the  Trial  Judge  and  concluded  that  Rakesh  Kumar  was

entitled  to  a  decree  for  specific  performance  of  the  agreement  to  sell

dated 29th May, 1986 and for delivery of vacant, peaceful and physical

possession of the land in dispute.

17. Having heard learned counsel for the parties, we are not in favour

of the view expressed by the High Court but subscribe to the view of the

Trial Judge.

18. The law on the subject of specific performance of contracts is quite

clear and it is not necessary to cite the dozens of judgments delivered by

this Court on the issue.   However, it is necessary to refer to two decisions

which are quite apposite to the facts of the case before us.

19. In  His  Holiness  Acharya  Swami  Ganesh  Dassji  v.  Sita  Ram

Thapar1this Court drew a distinction between readiness to perform the

contract and willingness to perform the contract. It was observed that by

readiness it  may be meant  the capacity  of  the plaintiff  to perform the

contract which would include the financial position to pay the purchase

price.  As far as the willingness to perform the contract is concerned, the

1  (1996) 4 SCC 526

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conduct of the plaintiff has to be properly scrutinised along with attendant

circumstances.  On the facts available, the Court may infer whether or not

the  plaintiff  was  always ready  and willing  to  perform his  part  of  the

contract. It was held in paragraph 2 of the Report:

“There is a distinction between readiness to perform the contract and willingness  to  perform the contract.  By readiness  may be meant the capacity of the plaintiff to perform the contract which includes  his  financial  position  to  pay  the  purchase  price.  For determining his willingness to perform his part of the contract, the  conduct  has  to  be  properly  scrutinised…...  The  factum of readiness  and  willingness  to  perform  plaintiff's  part  of  the contract is to be adjudged with reference to the conduct of the party and the attending circumstances. The court may infer from the facts and circumstances whether the plaintiff was ready and was always ready and willing to perform his part of the contract. The  facts  of  this  case  would  amply  demonstrate  that  the petitioner/plaintiff was not ready nor had the capacity to perform his part of the contract as he had no financial capacity to pay the consideration in cash as contracted and intended to bide for the time  which  disentitles  him  as  time  is  of  the  essence  of  the contract.”

20. In I.S. Sikandar (Dead) by Lrs. v. K. Subramani &Ors.2 this Court

noted that the plaintiff is required to prove that from the date of execution

of the agreement of sale till the date of the decree, he was always ready

and willing to perform his part of the contract. In this case, looking the

attendant facts and circumstances, the Court upheld the view of the Trial

Judge  that  the  plaintiff  had  no  money  to  pay  the  balance  sale

consideration  and  was  apparently  not  capable  of  making  necessary

2  (2013) 15 SCC 27

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arrangements for payment of the balance consideration. It  was held in

paragraph 45 and paragraph 47 of the Report:

“45.……..Further, the plaintiff is required to prove the fact that right from the date of execution of the agreement of sale till the date of passing the decree he must prove that he is ready and has always been willing to perform his part of the contract as per the agreement……”

“47. Further, there is nothing on record to show that the plaintiff could  have  made  arrangement  for  payment  of  the  balance consideration amount to them. But,  on the other hand the trial court  has  recorded  the  finding  of  fact  to  the  effect  that  the   correspondence  between  the  parties  and  other  circumstances would  establish  the  fact  that  the  plaintiff  had  no  money  for payment of balance sale consideration…….”

21. In so far as the present appeal is concerned, the material on record

clearly indicates that  Rakesh Kumar did not  have the necessary funds

available with him to pay the balance consideration.  His low income and

low bank balance indicated his incapacity to make the balance payment.

As far as his capacity to arrange for funds is concerned, it has come on

record that Rakesh Kumar did take a loan from his cousin but that was

only for his business and not for paying the balance consideration for the

land in dispute.  There is nothing on record to indicate that Rakesh Kumar

could  have  not  only  repaid  the  loan  taken  from  his  cousin,  but

additionally,  could  have  arranged  sufficient  funds  to  pay  the  balance

consideration. It is very doubtful, and it is easy and reasonable to infer

this, that Rakesh Kumar was incapable of meeting both liabilities.  

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22. On the facts placed before us, we are satisfied that the Trial Judge

was right in coming to the conclusion that Rakesh Kumar was not in a

position  to  pay  the  balance  consideration  to  Kalawati  and  the  other

vendors, and by necessary implication, it must be held that he was neither

ready nor willing to perform his part of the agreement.  

23. It  was  submitted  that  Kalawati  and  the  other  vendors  did  not   

perform their  part  of  the  agreement  despite  Rakesh Kumar requesting

them to do so.  The contention of  Rakesh Kumar was that the vendors

did not obtain a “no objection certificate” from the authorities concerned.

We have gone through the agreement to sell dated 29th May, 1986 and the

relevant clause of the contract is remarkably vague and reads as follows:

“That the vendors will obtain the no objection certificate from the authorities concerned and will inform the vendee by registered post after getting the income tax clearance certificate.”  

24. There  is  nothing  to  indicate  the  nature  of  the  “no  objection

certificate” that the vendors were required to obtain and who were the

authorities from whom the “no objection certificate” was required, nor is

there  any  indication  of  the  purpose  for  which  the  “no  objection

certificate”  was  required.   Similarly,  there  is  no  indication  about  the

nature  of  the  income  tax  clearance  certificate  required  and  for  what

purpose.  This clause appears to have been inserted in the agreement to

sell without any application of mind and it is quite possible, as alleged by

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the  vendors  that  the  agreement  to  sell  was  ante-dated  after  the

introduction of Section 260-UC in the Income Tax Act, 1961.  However,

we need not go into this possibility in view of the vague nature of the

clause.

25. On an overall consideration of the facts and in the circumstances of

the case, in our opinion, the High Court was in error in setting aside the  

judgment  and  decree  of  the  Trial  Judge.  Accordingly,  the  appeal  is

allowed and the judgment and decree passed by the High Court is set

aside.  No costs.

………………………J (Madan B. Lokur)

New Delhi;                                                            ...……………………..J February 16, 2018            (Deepak Gupta)

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