Katta Sujatha Reddy v. Siddamsetty Infra Projects (P) Ltd.

A purchaser paid Rs. 34,80,850 of Rs. 40,20,000 for 40.08 acres in 1997 but did not pay the balance within three months. It sued for specific performance (a court order to carry out the contract itself) in 2002. The Supreme Court held that the suit was time-barred and that the 2018 amendment to Section 10 of the Specific Relief Act does not apply to earlier transactions.

Quick Revision

Read the full judgment: Supreme Court of India (sci.gov.in)

Parties

Smt. Katta Sujatha Reddy — appellant no. 1 in Civil Appeal No. 5822 of 2022; vendor (defendant no. 6 in the suit).

Smt. Kamireddy Geetha Reddy — appellant no. 2 in Civil Appeal No. 5822 of 2022; vendor (defendant no. 8 in the suit).

Siddamsetty Infra Projects Pvt. Ltd. — respondent no. 1 in Civil Appeal No. 5822 of 2022; the purchaser and plaintiff in the suit. It is also the appellant in Civil Appeal No. 5823 of 2022.

Debbad Visweswara Rao (dead, through Lrs) and others — respondents in Civil Appeal No. 5823 of 2022.

Debbad Srinandhan Rao and others — appellants in Civil Appeal No. 5824 of 2022. The respondents are the State of Telangana and others.

Late D Narayana — original owner of the land; predecessor-in-interest of respondents 2 and 3 (para 4).

Sunil Siddam Setty — witness for the purchaser (PW1) (para 63).

Procedural History

1. Suit. The purchaser filed OS No. 88 of 2002 for specific performance before the Additional District Judge, Ranga Reddy District, LB Nagar, Hyderabad (para 7). The defendants included Smt. Katta Sujatha Reddy and Smt. Kamireddy Geetha Reddy, who were respondents 6 and 8 in the suit (para 3). The suit was presented on 09.08.2002 (paras 12, 28).
2. Trial Court issues. The trial Court framed five issues. They asked about specific performance, time as the essence (a fixed time that must be kept), limitation, alternative reliefs of possession and refund of Rs. 34,80,850 with interest at 36% a year, and relief (para 7).
3. Trial Court decision. The trial Court dismissed the suit. It held that time was not the essence, that the purchaser was not ready and willing, and that the suit was barred by limitation. Alternative reliefs also failed (paras 8-12).
4. High Court. The purchaser filed a first appeal, A.S. No. 998 of 2010, before the High Court for the State of Telangana at Hyderabad. It framed seven points (para 13). It partly allowed the appeal by judgment dated 23.04.2021 (paras 2, 20).
5. Supreme Court. Both the vendors and the purchaser appealed. Leave was granted in all matters (paras 1, 21). The vendors' appeal is Civil Appeal No. 5822 of 2022. The other two appeals are disposed of in line with it (para 81).

Trial Court findings as recorded

1. The purchaser was never put in possession. It never made the total payment of Rs. 34,70,000. A cheque for Rs. 5,00,000 was dishonoured, and the purchaser did not disclose this. The trial Court held that it suppressed material evidence (para 8).
2. The burden of proof lies on the person who pleads that time is the essence. For immovable property, time is not the essence unless the agreement says so and the parties' conduct treats it so (para 9).
3. Clause 3 set a three-month bar for payment of the sale consideration and for the vendors to furnish certificates. The vendors never issued a notice for delayed payment. So they never intended time to be the essence (para 9).
4. The vendors pleaded falsely that they had procured the documents under clause 3. But the purchaser also had grave laches (unreasonable delay) and came with unclean hands. It could not benefit from the vendors' false plea (paras 9-10).
5. The purchaser was never ready to pay the balance. Otherwise it would have sent a notice showing willingness (para 11).
6. Limitation: part one of Article 54 of the Limitation Act, 1963 applied. The three years ran to on or before 27.06.2000. The suit came on 09.08.2002, after a lapse of two years. The refund claim was barred under Article 47. The alternative relief also failed (para 12).

High Court findings as recorded

1. Point 1, limitation: clause 3 did not stipulate time as the essence. The vendors had not exercised the option to forfeit the advance. The trial Court erred in distinguishing time for payment from time for performance (para 14).
2. Point 2, possession: the vendors surrendered almost all their rights over the land to the purchaser. The deletion of the purchaser's name in Exs. B10 and B11 did not show lack of possession. One party to the agreement admitted that possession was given. Silence on possession in Exs. A2, A3, A4, A5, A29, A30 and the first notice did not prove otherwise (para 15).
3. Point 3, readiness and willingness: the vendors were at fault for not obtaining the certificates under clause 3. The purchaser applied to deposit the balance of Rs. 5,39,150, and the order became final. It had paid 90% within time and deposited the rest in Court. The High Court said no person would drag on the matter this long for payment of 10% of the price. It was ready and willing (para 16).
4. Point 4: the trial Court rightly held that time was not the essence (para 17).
5. Point 5, discretion: the trial Court should have granted specific performance. The vendors took false pleas that they did not receive the consideration and that they obtained the documents (para 18).
6. Point 6: a substituted provision operates retrospectively. Specific relief is part of procedural law. An appeal continues the suit, so a change in law before the appeal decision must be considered. Section 3 of the Amended Act is retrospective and applies to pending proceedings (para 19).
7. Point 7, relief: the purchaser succeeded on all points. The High Court partly allowed the appeal. It directed the vendors to register the suit property to the extent of the amount paid, that is 90% of the price, within three months. It ordered the Rs. 5,39,150 deposited under the trial Court order dated 11.07.2005 in IA No. 925/2005 to be refunded to the purchaser with any accrued interest (para 20).

Facts

1. Late D Narayana owned agricultural land, Sy. No. 300-309, admeasuring 141.05 acres. It lies in Budvel Village, Rajendra Nagar Mandal, Ranga Reddy District, Hyderabad. His successors are respondents 2 and 3 (para 4).
2. The vendors acquired part of the land from him by an agreement dated 19.03.1994. Two registered Joint GPAs dated 28.03.1994 were executed in the names of defendants 5 and 6 for Acs. 127.27 gts. (para 4).
3. The 1994 agreement and the GPA in favour of the purchaser did not materialize (para 5).
4. On 26.03.1997 and 27.03.1997 the parties made two fresh agreements to purchase Acs. 40.08 gts. The first covered Acs. 35.15 gts. for Rs. 38,37,500. The second covered Acs. 1.33 gts. for Rs. 1,82,500 (para 5).
5. The total price was Rs. 40,20,000. The suit land is in Sy No. 301 (part), 302, 303 and 304 (part) of Budvel Village, Rajendranagar Mandal (para 6).
6. The vendors received an advance of Rs. 34,70,000 and Rs. 10,850 (para 25). The purchaser paid Rs. 34,80,850 in all, by cash and cheques. This was not disputed (para 6).
7. The balance of Rs. 5,39,150 was payable within three months under clause 3. It was admittedly not paid in time (para 7).
8. Clause 21 recorded the earlier 19.03.1994 agreement, which did not materialize, so its price no longer applied (as read by the 2022 Court; see Subsequent Treatment). Clause 23 said the vendors would not claim any increase in the agreed price (para 32).
9. The purchaser sent a notice dated 08.02.2000 on 31.03.2000. It asked the vendors to execute the sale deed at a convenient date (paras 7, 26).
10. The vendors replied by letter dated 14.04.2000. They said the purchaser never offered to pay the balance and that the notice was a trick to get over limitation (para 27).
11. The purchaser sent a second notice on 06.07.2002 (para 7). The vendors replied on 22.07.2002 that the agreements were barred by limitation and the purchaser was never in possession (para 29).
12. The purchaser filed the suit on 09.08.2002 (para 28). Its plaint said that time was not the essence and the suit was within limitation in view of the reply notice (para 28).
13. The vendors filed a written statement on 25.10.2002. They said the notice was made to look dated 08.02.2000 but was posted on 31.03.2000 to cover the three-year period (para 29).
14. The purchaser also applied to deposit the balance of Rs. 5,39,150. The trial Court order dated 11.07.2005 in IA No. 925/2005 permitted it (paras 16, 20).

Issues Raised

1. Is the suit for specific performance barred by limitation? (para 24, issue A)
2. Is the amended Section 10 of the Specific Relief Act prospective or retrospective in operation? (para 24, issue B)
3. Is the purchaser entitled to the relief of specific performance? (para 24, issue C)
4. In any case, can the purchaser take the benefit of Section 12 of the Specific Relief Act in view of the part payment made? (para 24, issue D)

Arguments Contended

For the purchaser (Siddamsetty Infra Projects Pvt. Ltd.)

Counsel: Mr. Dushyant Dave and Mr. Harin P. Raval, Senior Counsel (para 22). No case law is recorded for this side.

1. The High Court rightly exercised jurisdiction. Its judgment rests on oral and documentary evidence. Its reasons follow settled principles (para 22).
2. Both courts found concurrently that time was not the essence. No time was fixed for performance of the contract. The three months in clause 3 was only for payment (para 22).
3. Where no date is fixed for performance, limitation runs from the date of specific refusal. The refusals were on 14.04.2000 and 22.07.2002. So the suit was in time (para 22).
4. The purchaser proved that it was always ready and willing. It paid 90% of the price within three months. It sent legal notices dated 08.02.2000 and 06.07.2002 showing readiness to pay the balance (para 22).
5. The vendors avoided receiving the money despite repeated requests. They did not procure the requisite permissions (para 22).
6. Defendant no. 5 admitted in her pleadings that the purchaser was put in possession. The vendors did not challenge this in the rejoinder or in the evidence of the DWs. She is a proper party (para 22).
7. The parties' stand on possession cannot be a ground to refuse specific performance. Delivery of possession is ancillary, so the issue is inconsequential (para 22).
8. After the amendment to Section 10, specific performance is no longer discretionary. Courts must grant it unless the case falls within the statutory exceptions (para 22).

For the vendors (Katta Sujatha Reddy and Kamireddy Geetha Reddy)

Counsel: Mr. Mukul Rohatgi and Mr. Harish Salve, Senior Counsel (para 23). The vendors relied on the Delhi and Karnataka High Courts for the point on the amendment (para 23). The judgment does not name those cases.

1. The purchaser did not come with clean hands. It did not pay the balance in time. The trial Court found its statement on possession false for four reasons (para 23, i):
   • (a) The suit sought possession as an alternate prayer. That would not be needed if the purchaser was already in possession.
   • (b) The purchaser named no date on which it was put in possession.
   • (c) Its own draft sale deed did not say it already had possession. The draft said possession would be given on execution.
   • (d) PW2 (a neighbour) said the purchaser laid roads, built two rooms and put up fencing. The documents and photographs show no roads or rooms. The suit made no such pleading.
2. The suit was barred by limitation. The purchaser had to pay by 27.06.1997. Its case is that the vendors evaded execution in June 1997. So limitation ran from June 1997 to June 2000. The suit came on 09.08.2002. Its oral evidence also shows the right to sue arose in 1997 (para 23, ii).
3. The notice said to be dated 08.02.2000 was sent on 31.03.2000 and was purposely backdated (para 23, iii).
4. The purchaser was not ready and willing. It failed to pay the balance within three months and even within three years (para 23, iv).
5. A suit for specific performance cannot be decreed in pieces. The High Court should have accepted the trial Court's decision. Relief for only 90% itself shows the purchaser was not ready and willing (para 23, v).
6. The 2018 amendment to Section 10 is substantive and prospective. The High Court wrongly treated it as procedural and retrospective (para 23, vi).
7. The High Court misread Section 12 of the Specific Relief Act. Inability to perform does not arise here (para 23, vii).
8. Defendant no. 5 has nothing to do with the agreements. She filed a collusive written statement and never entered the witness box (para 23, viii).

Court's Reasoning

Krishna Murari, J. (for the Bench)

The judgment is a single opinion. The Bench heard both sides and examined the record (para 24). Leave was granted in all matters (para 1).

Issue A: limitation

1. Noted: the sale price was Rs. 38,37,500 and Rs. 1,82,500. The vendors received advances of Rs. 34,70,000 and Rs. 10,850 (para 25).
2. Noted: the purchaser sent the notice dated 08.02.2000 on 31.03.2000. It called on the vendors to execute the sale deed at a convenient date (para 26).
3. Noted: the vendors replied on 14.04.2000 that the notice was a trick to get over limitation (para 27).
4. Noted: the suit was filed only on 09.08.2002. The plaint's limitation averment is quoted in the judgment (para 28).
5. Noted: defendant no. 6 pleaded in the written statement of 25.10.2002 that the notice was made to look dated 08.02.2000. It also pleaded two reply notices (14.04.2000 and 22.07.2002) and the purchaser's silence for about 2½ years (para 29).
6. Noted: the First Schedule to the Limitation Act, 1963 (Article 54) gives three years for a suit for specific performance. The period runs from the date fixed for performance. If no date is fixed, it runs from when the plaintiff has notice that performance is refused. The High Court held that clause 3 had no calendar date for performance, only a payment period. It also read the vendors' duty to produce certificates as a condition for the purchaser. So it held that the first part of Article 54 was wrongly applied (para 30).
7. Noted: clause 3 has two parts. The first is the purchaser's duty to pay. The second is the vendors' duty to provide certificates, such as an income tax exemption certificate and an agriculture certificate (para 31).
8. Noted: no consequence was spelt out for the vendors' failure. For the purchaser, the clause requires forfeiture of the advance if payment is not made in time (para 31).
9. Noted: in Chand Rani v. Kamal Rani, the Court held that there is no presumption that time is the essence in a sale of immovable property. It may still infer performance within a reasonable time from the express terms, the nature of the property and the surrounding circumstances (para 31).
10. Held: the language of the agreements shows severe forfeiture if payment is not made within three months. Why: the earlier 1994 agreement had failed. The fresh agreements gave a last opportunity. Clause 21 recorded this (para 32).
11. Held: clause 23 freezes the price and cannot be independent of a fixed time. Why: "A contrary interpretation would render the contract commercially unreasonable and unworkable." In plain words: a price freeze with no time limit would make the contract unworkable. The freeze must be read as tied to a fixed period and a reasonable time (para 33).
12. Held: the contract was strictly conditioned on a time frame. Section 55 of the Contract Act applies. If a party fails to act at the specified time, the contract becomes voidable at the promisee's option, where time was of the essence (para 34).
13. Held: the vendors were entitled to rescind (cancel) the contract, since time was the essence. Under Article 54, the date fixed for payment was three months from 26.03.1997 and 27.03.1997. The period to sue began on 26/27.6.1997 and ended at the end of June 2000 (para 35).
14. Held: the notice of 31.03.2000 does not save the suit. The Court accepted that the argument seemed attractive at first sight. Why: "a party cannot claim equity to escape such consequences." In plain words: once a condition is breached and its consequences follow, equity cannot undo them (para 36).
15. Held: Article 54 has two consequences depending on whether a time for performance is fixed. The notices and replies matter only if no time is fixed. Here clause 3 read with clause 23 fixed a time (para 37).
16. Held: the suit was clearly barred by the first part of Article 54. No amount of advance could remedy the breach of condition (para 38).
17. Noted: this finding would end the matter. The Court still examined the merits. This further reasoning follows the limitation holding (para 39).

Issue B: is amended Section 10 prospective or retrospective?

18. Noted: the question matters because the 2018 Amendment Act would make specific performance mandatory. Otherwise the Court decides on equity whether to grant it or award damages (para 40).
19. Noted: the Specific Relief Act, 1963 replaced the 1877 Act after the Law Commission's Ninth Report. It followed the English position. In early common law only damages were given. Courts of Equity later granted specific performance where damages were inadequate or special equitable rights were breached (para 41).
20. Noted: the relief remained discretionary because it came from equity. Swinfen Eady M.R. said so in Whiteley Limited v. Hilt. That case concerned delivery up of a chattel (para 42).
21. Noted: Civil Law enforces the sanctity of contract with greater rigour. Courts cannot weigh damages against specific performance. That choice is best left to the legislature, without blindly following the English or Civil Law approach (para 43).
22. Noted: the High Court treated the Specific Relief Act, 1963 as procedural. It held the 2018 amendment procedural and retrospective. It relied on Radheshyam Kamila v. Kiran Bala Dasi. That case relied on Pollock & Mulla and said specific relief belongs to the law of procedure (para 44).
23. Held: the Court does not accept this reasoning. After 2018, specific performance is an enforceable right. It no longer depends on equitable principles set by judges. It rests on the ingredients in the Act (para 45).
24. Held: to decide whether a substituted law is procedural or substantive, the nature of the amendment matters. The nature of the parent enactment may not be material (para 45).
25. Held: the High Court's reliance on Adhunik Steels v. Orissa Manganese and Minerals (P) Ltd. was misplaced. That case interpreted Section 9 of the Arbitration Act on injunctions (orders to do or not do an act). The question there was whether the CPC or the Specific Relief Act affects Section 9 (para 46).
26. Noted: the Adhunik Steels passage said that injunction is a form of specific relief. It described the Specific Relief Act as an Act to define and amend the law of certain specific reliefs. It noted that the law of specific relief is in essence part of procedure. It listed Sections 36 to 42 on injunctions. The Court summarises the quoted passage here (para 47).
27. Held: that passage, read alone, does not support the outcome of that case. Adhunik Steels nowhere said that the Specific Relief Act, 1963 provides only a procedural mechanism. The Court found it difficult to read it as the High Court did (para 47).
28. Held: the 2018 amendment strengthened the sanctity of contracts. It was radical and created new rights and obligations. Amended Section 10 says that specific performance of a contract shall be enforced by the court, subject to Section 11(2), Section 14 and Section 16 (para 48).
29. Held: the provision moved from the Court's discretion to a mandatory power that must be exercised when the ingredients are met. This reduces efficient breaches (para 49).
30. Held: before the amendment, adequacy of damages under Section 14(1)(a) was a major consideration. That consideration is now done away with (para 50).
31. Held: the 2018 amendment is not merely procedural. It has substantive principles built in. So it cannot apply retrospectively (para 51).
32. Noted: Shyam Sunder v. Ram Kumar held that a repeal followed by fresh legislation does not affect substantive rights on the date of the suit unless it is expressly or by necessary intendment retrospective. An amending Act that affects procedure is presumed retrospective. The amended Section 15 there was prospective, following Shanti Devi v. Hukum Chand. The Court summarises the quoted passage here (para 52).
33. Held: "when a substantive law is brought about by amendment, there is no assumption that the same ought to be given retrospective effect." In plain words: the legislature must say expressly if it wants such an amendment to be retrospective (para 53).
34. Held: substitution ordinarily replaces the earlier provision from the start of the enactment. But if the substituted provision creates new rights or duties, or takes away vested rights, it cannot be assumed retrospective. The legislature must say expressly whether it is (para 54).
35. Noted: the amendment act allowed the Central Government to notify the date of commencement, and different dates for different provisions. 01.10.2018 was the appointed date (para 55).
36. Held: the 2018 amendment to the Specific Relief Act is prospective. It cannot apply to transactions that took place before it came into force. The Court had no hesitation in so holding (para 56).

Issue C: is the purchaser entitled to specific performance?

36. Held: since the amendment is prospective, the earlier law applies. Under it, specific performance was discretionary. That discretion had to be used in a principled way. The Court quoted Saradamani Kandappan v. S. Rajalakshmi (para 57).
37. Noted: Saradamani Kandappan stated an urgent need to revisit the rule that time is not of the essence in immovable property contracts. The Court there did not refer the matter to a larger Bench. It reiterated the K.S. Vidyanadam guidance (para 57):
    • (i) A time or period fixed by the parties for steps or completion must have significance and cannot be ignored.
    • (ii) Courts apply greater scrutiny and strictness when deciding if the purchaser was ready and willing.
    • (iii) Not every suit filed within limitation must be decreed. Courts frown on suits not filed soon after the breach or refusal. The three-year period helps purchasers in special cases. An example is where most of the price has been paid and possession given in part performance.
38. Held: the purchaser should have been vigilant and could not be careless or slow. The clause was a last chance after the earlier lapse. The time for performance, including payment, lasted till June 1997 (para 58).
39. Held: the purchaser should have acted at once. Then it would have had a clear right to enforce for three years from the last date fixed for completion (para 59).
40. Held: the notice dated 08.02.2000 implicitly acknowledges that the purchaser itself treated time as the essence. It sought novation (replacement of the agreement with a new one) after the breach. The judgment quotes the passage in the notice (para 60).
41. Held: at best, the notice reflects an intention by the vendor to renegotiate the terms. The judgment says this was not accepted in toto by the vendor (para 61).
42. Noted: readiness and willingness is an essential ingredient under Section 16 of the Specific Relief Act, 1963. Section 16(c) bars specific performance for a person who fails to aver and prove that they performed the essential terms, or were always ready and willing to perform the essential terms. Terms prevented or waived by the defendant are excepted (para 62).
43. Held: the burden is on the purchaser to prove it was always ready. Its case must be that only the vendor refused, for extraneous reasons. Sunil Siddam Setty deposed as PW1 for the purchaser (para 63).
44. Noted: PW1's cross-examination is quoted. He admitted that a Rs. 5,00,000 cheque bounced and was replaced by a demand draft. He said the three-month period was stipulated with some conditions. He said no notice was issued to the defendants in 1997. He said no written notice went to D5 before 06.07.2002. He said the transaction was in good faith (para 64).
45. Held: the purchaser did not voluntarily follow the time stipulation. To get past the time condition, it invoked good faith. Good faith is a higher duty of care. "Unless such duty is expressly stipulated, good faith standard cannot be implicitly read into any contract." (para 65).
46. Held: the Court does not accept a general good-faith standard used to avoid explicit conditions. Such broad standards have far-reaching consequences (para 66).
47. Noted: the Court agreed that such an implicit reading would come into play after the 2018 amendment, which enables specific performance to uphold sanctity of contract. On these facts it cannot accept that higher good-faith standards were relevant (para 66).
48. Noted: DW1 (Smt. Katta Sujatha Reddy) said that all documents were available. The purchaser entered the agreement only after it was satisfied about the title (para 67).
49. Held: Section 16(c) applies only if the purchaser was ready and willing within the three months under clause 3. The Court added that specific performance can be granted only when essential terms are not violated, under Section 16(b) (para 68).
50. Held: the purchaser was not ready or willing to perform its part in the stipulated time. So specific performance cannot be granted for the entire contract (para 69).
51. Held: on possession, the High Court did not consider PW1's statement properly. PW1 did not say when the purchaser was put into possession. He did not prove any development cost (para 70).
52. Held: PW2's claim of development is unacceptable in view of Exhibits A22 to A26, the photographs. They show no development. Revenue mutation records carry little weight when possession is decided on the facts (para 71).
53. Noted: the Court did not discuss the testimony of DW2 and DW3 in detail. It said their testimony clearly shows the purchaser was never in possession (para 72).
54. Held: an agreement of sale coupled with possession needs stamp duty under Schedule 1A, Article 47A of the Stamp Act. Asking for recovery of possession also shows the plaintiff was not in possession. The trial Court rightly decided against the plaintiff. The Appellate Court reversed this on a wrong view of facts and law (para 73).

Issue D: Section 12 of the Specific Relief Act

55. Noted: the High Court granted 90% of the land because the purchaser paid 90% of the price. The argument looks attractive at first, but a closer look shows otherwise (paras 74-75).
56. Noted: Section 12 in short:
    • Sub-section (1): the court will not order specific performance of a part of a contract, except as the section allows.
    • Sub-section (2): if a party cannot perform the whole, and the unperformed part is small and can be compensated in money, the court may order the rest with compensation.
    • Sub-section (3): if the unperformed part is considerable, or cannot be compensated in money, the party is not entitled to a decree. But the court may direct the defaulting party to perform what it can. The other party must pay the agreed price for the whole, reduced for the unperformed part (or the whole price without abatement, where money cannot compensate). It must also give up all claims to the remaining part and to compensation.
    • Sub-section (4): a part that stands on a separate and independent footing may be specifically performed.
    • Explanation: a party is unable to perform if part of the subject matter has ceased to exist by the time of performance (para 75).
57. Noted: Jaswinder Kaur v. Gurmeet Singh explained Section 12. "Unable to perform" means, for example, that part of the property was destroyed. It can also arise from deficiency in quantity, a legal prohibition or similar causes. Section 12 does not apply where the inability arises from the plaintiff's own conduct. Abdul Rahim v. Maidhar Gazi and Graham v. Krishna Chunder Dey are cited there. A plaintiff in default cannot invoke Section 12(3) (para 76).
58. Held: here neither side was unable to perform the rest, and the remaining part was not waived. The purchaser breached an essential condition. That disentitles it to specific performance (para 77).
59. Held: the purchaser's claim is hit by delay and laches (unreasonable delay). It did not act within the stipulated time. The suit was delayed by almost five years (para 77).
60. Noted: Rachakonda Narayana v. Ponthala Parvathamma held that Section 12(3) needs two preconditions. The plaintiff must have paid the whole consideration for the performable part. It must also give up claims to the other part and to compensation. Even then, relief is ordinarily granted unless there is delay, laches or other disability (para 77).
61. Held: this is not a fit case for relief under Section 12. The claim is barred by delay, laches and limitation (para 78).
62. Held: the purchaser's conduct caused the breach. It was not willing to perform after entering a time-sensitive agreement. Only part consideration was paid, which is admitted (para 79).
63. Held: despite the forfeiture clause, the Court, to do complete justice between the parties, directs the vendors to repay the amount with interest at 7.5% a year (para 79).
64. Noted: the appeal was allowed on these terms and the parties left to bear their own costs (para 80). The other appeals were disposed of accordingly (para 81).

Authorities

• Chand Rani (dead) by Lrs. v. Kamal Rani (dead) by Lrs. ((1993) 1 SCC 519): quoted. Time is not presumed to be the essence in sale of immovable property. It may still be inferred from the terms, the property or the circumstances (para 31).
• Whiteley Limited v. Hilt ([1918] 2 K.B. 808): quoted. Delivery up of a chattel is discretionary. It shows that equitable relief stayed discretionary (para 42).
• Radheshyam Kamila v. Kiran Bala Dasi (AIR 1971 Cal 341): relied on by the High Court and not accepted. It called specific relief part of procedural law (para 44).
• Adhunik Steels Limited v. Orissa Manganese and Minerals (P) Ltd. ((2007) 7 SCC 125): distinguished. The High Court's reliance was misplaced. The case concerned injunctions under Section 9 of the Arbitration Act (paras 46-47).
• Shyam Sunder and others v. Ram Kumar and Another ((2001) 8 SCC 24): applied. Substantive amendments are prospective unless made retrospective expressly or by necessary intendment (paras 52-53).
• Saradamani Kandappan v. S. Rajalakshmi and others ((2011) 12 SCC 18): quoted. Guidance on time, strictness on readiness and willingness, and delay in suing (para 57).
• Jaswinder Kaur v. Gurmeet Singh ((2017) 12 SCC 810): quoted on the meaning of unable to perform in Section 12 (para 76).
• Rachakonda Narayana v. Ponthala Parvathamma ((2001) 8 SCC 173): quoted on the preconditions of Section 12(3) and on delay and laches (para 77).
• Also cited in footnotes: Pollock & Mulla on the Indian Contract Act and Specific Relief Act (4th ed.) (para 44); David Bean on Injunctions and Dr. Banerjee's Tagore Law Lectures on Specific Relief (para 47); Shanti Devi v. Hukum Chand ((1996) 5 SCC 768) (para 52); Saradamani Kandappan v. S. Rajalakshmi ((2011) 12 SCC 18) (para 57); K.S. Vidyanadam ((1997) 3 SCC 1) and Chand Rani ((1993) 1 SCC 519) (para 57); Abdul Rahim v. Maidhar Gazi (AIR 1928 Cal 584) and Graham v. Krishna Chunder Dey (AIR 1925 PC 45) (para 76).

Provisions mentioned

• Article 54, Limitation Act, 1963: three years for specific performance. Time runs from the date fixed for performance. If no date is fixed, it runs from notice of refusal (paras 12, 30, 35, 37, 38).
• Article 47, Limitation Act: the trial Court held the refund of the advance barred under it (para 12).
• Section 55, Indian Contract Act: failure to act at a fixed time makes the contract voidable at the promisee's option, if time was of the essence (para 34).
• Section 10, Specific Relief Act, 1963 (amended 2018): specific performance shall be enforced by the court, subject to Section 11(2), Section 14 and Section 16 (paras 48-49).
• Section 3 of the Amended Act: the High Court held it retrospective. This Court did not accept that (para 19).
• Section 14(1)(a), Specific Relief Act: adequacy of damages, no longer a consideration after the amendment (para 50).
• Section 15: the substituted provision of the law of pre-emption considered in Shyam Sunder (para 52).
• Section 16, Specific Relief Act: personal bars to relief. Clause (c) requires the plaintiff to aver and prove readiness and willingness. Clause (b) bars relief where essential terms are violated (paras 62, 68).
• Section 12, Specific Relief Act: specific performance of part of a contract (paras 75-78).
• Section 9, Arbitration and Conciliation Act, 1996: interim injunctions, considered in Adhunik Steels (para 46).
• Sections 36 to 42, Specific Relief Act: injunctions, as listed in the Adhunik Steels passage (para 47).
  • Section 36: preventive relief by injunction.
  • Section 38: perpetual injunctions.
  • Section 39: mandatory injunctions.
  • Section 40: damages instead of, or with, an injunction.
  • Section 41: when an injunction cannot be granted.
  • Section 42: injunction to perform a negative covenant.
• Article 47A, Schedule 1A, Stamp Act: stamp duty on an agreement of sale coupled with possession (para 73).

Judgement

1. Civil Appeal No. 5822 of 2022 (the vendors' appeal) is allowed on these terms (para 80).
2. The vendors must repay to the purchaser the amount it paid, with interest at 7.5% a year. Interest runs from the date each payment was made until the whole amount is paid back (para 79).
3. The vendors must pay the entire amount to the credit of the suit account within six months from the date they receive a copy of the order (para 79).
4. The parties bear their own costs (para 80).
5. Civil Appeal No. 5823 of 2022 and Civil Appeal No. 5824 of 2022 are disposed of in light of this judgment (para 81).
6. Signed by N. V. Ramana, C.J.I., Krishna Murari, J. and Hima Kohli, J. New Delhi, 25 August 2022.

Legal Principle / Ratio

Where the terms of an agreement show that payment within a fixed period was strictly required, the period to sue for specific performance runs from that fixed date. The 2018 amendment to Section 10 of the Specific Relief Act is prospective and does not reach earlier transactions.

Key holding: the 2018 amendment "is prospective and cannot apply to those transactions that took place prior to its coming into force." (para 56).

Obiter and further grounds: after holding the suit barred, the Court gave further reasons on readiness and willingness, possession and Section 12 (para 39). Its remark that a good-faith standard could be read in after the 2018 amendment is an observation, not a ground of decision (para 66).

Subsequent Treatment

Siddamsetty Infra Projects v. Katta Sujatha Reddy 2024 — M/s Siddamsetty Infra Projects Pvt. Ltd. v. Katta Sujatha Reddy and others (2024 INSC 861)

Supreme Court of India, inherent jurisdiction. Review Petition (C) No. 1565 of 2022 in C.A. No. 5822 of 2022, with Review Petition (C) No. 1839 of 2024 in C.A. No. 5823 of 2022. Decided 08 November 2024 by Dr D. Y. Chandrachud, C.J.I., J. B. Pardiwala and Manoj Misra, JJ. The judgment is by Dr D. Y. Chandrachud, C.J.I. Paragraph numbers below are those of the review judgment.

• What it decided: the Court allowed the review petitions. It recalled the judgment of 25 August 2022 and restored the High Court judgment of 23 April 2021 (paras 52-53).
• Test for review: review lies for a mistake or error apparent on the face of the record. The error must strike one on a mere perusal. Review is not an appeal, and a second possible view is no ground (paras 18-19).
• Central point: the finding that time was of the essence was central to the 2022 reasoning on both limitation and specific performance (para 20).
• Clause 3: the review Court agreed that clause 3 has two obligations (para 24). It held that the 2022 judgment missed the words in clause 3 saying that the agreement of sale will be cancelled. Those words give a consequence for the vendors' failure to produce documents. The Court called the omission an error apparent on the face of the record (paras 24-25).
• Clause 21: the 2022 judgment read the 19 March 1994 agreement as one between the purchaser and the vendors. The review Court held it was an agreement by the original owners in favour of the vendors, and the purchaser was not a party (para 27). It rejected the argument that the time-of-the-essence finding stood independently of clause 21 (para 28).
• Limitation: clause 23 alone could not fix a time. Clause 6 fixes no time for the sale deed. The consequence in clause 3 is forfeiture of the advance, not refusal to execute the sale deed. So clauses 3, 21 and 23 fix no time for performance (paras 29-30).
• Result on limitation: the second part of Article 54 applied. Time ran from the vendors' reply of 14 April 2000 refusing performance. The suit was within limitation, whether filed on 9 August 2002 or 30 July 2002 (paras 30-31).
• Specific performance: the review Court did not decide whether the 2018 amendment to Section 10 is prospective. It said that even if the relief stayed discretionary, the 2022 Court made a grave error in exercising that discretion (para 32). The review judgment calls the amendment the 2008 amendment in that paragraph.
• Readiness and willingness: the 2022 reasoning fell with its reading of clauses 3 and 21 (para 36). Its finding that the vendors had the documents was another error apparent, since the Trial Court finding that they had not was not challenged (paras 37-40). The review Court held the purchaser ready and willing under Section 16(c). It relied on payments of about 75% of the price and on the explanation to Section 16(c) (para 41).
• Discretion under Section 10 (as it stood before 2018): nothing in the agreements rebutted the presumption that money cannot compensate for breach of a contract to transfer immovable property. The Court held this a fit case to direct specific performance (para 42).
• Lis pendens: the vendors said the land was sold after 25 August 2022 and before the review petition was registered on 13 December 2022 (para 43). The Court held that Section 52 of the Transfer of Property Act applies from institution of the review petition within thirty days. A transfer during pendency is subject to the final result (paras 44-49).
• Review grounds and reply: the petitioner argued that the 2022 judgment misread clause 21, wrongly recorded that the vendors produced the certificates, and misread clause 3. The vendors said the judgment was sound apart from the clause 21 reference and that the land was sold after it (paras 16-17).
• Review petition timeline: the petition was filed on 23 September 2022, defects were cured on 11 November 2022, and it was registered on 13 December 2022. Notice was issued on 26 September 2024 (para 44).
• Lis pendens conditions: the review Court listed six conditions for Section 52 of the Transfer of Property Act to apply (para 46). It relied on Bellamy v. Sabine and Jayaram Mudaliar v. Ayyaswami for the purpose of the doctrine (paras 47-48).
• Trial Court and High Court records: the review Court quoted the Trial Court finding that the vendors had not obtained the certificates. It noted that the High Court recorded that this finding was not challenged (paras 38-39).
• Section 12: the review Court noted that the 2022 judgment refused relief under Section 12 (paras 50-51).

Effect on the 2022 judgment: the review Court recorded the 2022 holding that the amendment is not retrospective (para 13). It said it would not disturb a finding without an apparent error (para 32). It did not identify an error in that holding, but recalled the whole judgment (para 52). The review order does not say whether that holding survives. That last point is commentary.

Other later cases (not summarized): none fetched. No other later judgment naming this case was found in the scan of the saved judgments.

Critical Analysis

Analysis based on the judgment text.

• The Court said limitation alone would end the case. It still decided the merits (para 39). A reader must separate the limitation holding from the further grounds.
• The Court held that the 2018 amendment is prospective. It also said the earlier discretion must be used in a principled way (paras 56-57). The judgment does not say what the position is for suits filed after 01.10.2018 on earlier agreements. Para 56 refers to transactions before the date.
• Para 66 says a wider good-faith reading would come into play after the amendment. The judgment does not explain how far that would go.
• The Court directed repayment with interest although the agreement had a forfeiture clause. It said this was to render complete justice (para 79).
• The judgment records Rs. 34,70,000 in some places and Rs. 34,80,850 in others. The difference is the Rs. 10,850 advance on the second agreement (paras 6, 8, 25).
• The 2024 review order recorded the holding on the 2018 amendment without finding an error in it, but recalled the whole judgment. It did not say whether the holding survives (review order, paras 13, 32, 52).
• In Saradamani Kandappan the Court left the question of time in immovable property contracts for a later case (para 57). This judgment does not revisit it.

Significance

• The Court held that the 2018 amendment to Section 10 is substantive and prospective (paras 51, 56).
• It explained that a substitution does not automatically apply from the start of the enactment if it creates new rights or duties (para 54).
• It read a payment clause with a price-freeze clause to make time of the essence (paras 32-35).
• It held that limitation ran from the date fixed for payment, so later notices did not help (paras 35-38).
• It applied strict scrutiny of readiness and willingness (paras 57-69).

Exam-Important Points

• Facts in one line: two 1997 agreements for 40.08 acres; Rs. 34,80,850 paid of Rs. 40,20,000; balance not paid in three months; suit filed on 09.08.2002.
• Article 54, Limitation Act: three years from the date fixed for performance. Here the date was three months from 26/27.03.1997, so limitation ended in June 2000 (paras 35, 38).
• Section 55, Contract Act: failure at the fixed time makes the contract voidable if time was of the essence (para 34).
• The 2018 amendment to Section 10 is substantive and prospective. It came into force on 01.10.2018 (paras 55-56).
• Under Section 16(c), the plaintiff must aver and prove readiness and willingness. The burden is on the purchaser (paras 62-63).
• Section 12 does not help a plaintiff who is itself in default (paras 76-78).
• Trap: the limitation holding already disposed of the suit. The other issues are further grounds (para 39).
• Trap: the Court refused specific performance but still ordered a refund with interest at 7.5% a year (para 79).
• Authorities to remember: Chand Rani v. Kamal Rani; Shyam Sunder v. Ram Kumar; Saradamani Kandappan v. S. Rajalakshmi; Jaswinder Kaur v. Gurmeet Singh.

Prepared from the full text of the judgment. The AIR and SCC citations are not in the judgment text. Paragraph numbers follow the official Supreme Court judgment text; law reports may number the same paragraph differently.