Reportable  IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 147-148 OF 2001

MAN KAUR (DEAD) BY LRS. ….APPELLANTS

VS.

HARTAR SINGH SANGHA                  …..RESPONDENT  

J U D G M E N T  

R. V. RAVEENDRAN J.,  

The  appellant  (Man  Kaur,  who  died  during  the  pendency  of  this  

appeal and is represented by her Legal Representatives) was the defendant in  

a  suit  for  specific  performance  of  an  agreement  of  sale,  filed  by  the  

respondent.  For  convenience  the  appellant  and  respondent  will  also  be  

referred by their ranks in the suit as ‘defendant’ and ‘plaintiff’ respectively.

2. The appellant Man Kaur was the owner of the suit property, a plot  

admeasuring 1000 sq.yards with the building thereon, identified as ‘Annexe  

No 508’ situated in Sector-18B, Chandigarh. The respondent-plaintiff was,  

at  all  the relevant points of time, a Non-Resident Indian living in United  

Kingdom. An agreement of  sale  dated 20.10.1978 was  entered between  

defendant represented by her husband and attorney holder Kartar Singh, as  

vendor, and plaintiff represented by his attorney holder Paramjit Singh, as  

purchaser. The material terms of the said agreement were :  

(i) The  defendant  shall  sell  the  suit  property  to  plaintiff  for  a  consideration of Rs.1,50,000/-.

(ii) As  the  premises  was  tenanted  the  defendant  was  liable  to  deliver  vacant possession of only a small portion which was in her occupation. If the  vendor was able to get the tenant vacated and deliver vacant possession of  the entire premises, then the sale price shall be Rs.1,60,000/-.

(iii) A  sum of  Rs.10,000/-  was  paid  in  cash  as  earnest  money  by  the  attorney holder of the purchaser to the attorney holder of the vendor.

(iv) The sale had to be completed by 20.12.1978 and the balance sale price  shall be paid at the time of registration of the sale deed.

(v)  The vendor had to deliver at the time of registration of the sale deed,  her  title  deed,  as  also  the  NOC  from  the  Estate  Office,  Chandigarh,  permission  for  the  sale  under  Urban  Land  (Ceiling  and  Regulation)  Act  1976, and Clearance Certificate under section 230A of the Income Tax Act,  1961 and other relevant documents if any.

(vi) If the vendor committed default, he had to pay double the amount of  earnest money to the purchaser and if the purchaser committed any default,  the sum of Rs.10,000/- paid as earnest money would stand forfeited; and

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(vii) The bargain was entered through the property dealer -- M/s R. P. Sethi  & Co. to whom both the parties should pay 2% commission on the total  price;  and  in  the  event  of  default,  the  defaulting  party  shall  pay  4%  commission.  

The agreement of sale was signed by the attorney holder of the vendor and  

attorney  holder  of  the  purchaser  and  witnessed  by  Hari  Singh  (Property  

Dealer)  and Balraj  Singh (property dealer carrying on business under the  

name and style of M/s R. P. Sethi & Co.). The agreement also contained an  

endorsement by Kartar Singh acknowledging the receipt of Rs.10000/- as  

earnest money in addition to another sum of Rs.1500/-.  

3. On  25.4.1980  the  respondent  (represented  by  his  attorney  holder  

Jagtar Singh Sangha under power of attorney dated 1.3.1980), filed a suit for  

specific  performance of the said agreement of sale,  against the appellant.  

The plaint after referring to the terms of the agreement of sale, averred that  

the bargain was struck through property dealer Balraj  Singh of M/s.  R.P.  

Sethi & Co; that the time for performance was extended from time to time  

till  7.6.1979;  that  the  defendant’s  attorney  holder  and  plaintiff  reached  

Chandigarh on 7.6.1979; that though defendant’s attorney holder stated that  

he had come to Chandigarh to execute the sale deed, he did not go over to  

the Sub-Registrar’s office nor executed the sale deed; that plaintiff remained  

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present  in  the  Sub-Registrar’s  office  at  Chandigarh,  and  recorded  his  

presence  on  7.6.1979  by  presenting  an  application  and  getting  an  

acknowledgement  from the Sub-Registrar;  that  after  7.6.1979, neither  the  

defendant nor her attorney holder Kartar  Singh came to Chandigarh; that  

they did not also contact the plaintiff or the property dealer Balraj Singh; and  

that  the  repeated  attempts  of  the  property  dealer  Balraj  Singh to  contact  

defendant were futile. The plaint also averred that the plaintiff was always  

ready and willing to perform his part of the contract and get the sale deed  

registered by paying the balance consideration; and that in spite of a  notice  

dated  5.3.1980  calling  upon  the  defendant  to  complete  the  sale,  the  

defendant had failed to execute the sale deed. The plaintiff therefore prayed  

for specific performance of the agreement of sale dated 20.10.1978 or in the  

alternative, if he was found not entitled to specific performance, then for a  

decree of recovery of Rs.21,500/-  (that  is  Rs.11500/-  paid to defendant’s  

attorney holder and Rs.10000/- as liquidated damages) with costs.  

4. The defendant resisted the suit. The defendant alleged that as she and  

her  husband  were  residents  of  Rourkela,  it  was  agreed  that  the  property  

dealer  Balraj  Singh,  who was  acting  on  behalf  of  the  purchaser-plaintiff  

would be responsible for securing the required clearances for the sale; that a  

sum of Rs.1500/-  was paid by plaintiff’s  attorney holder  to Balraj  Singh  

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(shown  as  advance  payment  to  vendor  in  the  receipt  portion  of  the  

agreement  of  sale)  to  secure  the  said  NOC/permission/clearance;  that  

defendant  signed and delivered  to  Balraj  Singh  the  necessary  papers  for  

getting the clearances/certificates; that time stipulated for sale (20.12.1978)  

was  the  essence  of  the  contract;  that  Balraj  Singh sent  a  telegram dated  

2.6.1979 requiring defendant’s husband Kartar Singh to reach Chandigarh  

on 7.6.1979 for registration,  assuring that registration of sale deed would  

definitely take place on that day and no further extension would be sought;  

that in response to it, the defendant’s husband, who was  intent to maintain  

cordial relationship, in spite of the expiry of the last date fixed for sale, went  

to Chandigarh and met the plaintiff and Balraj Singh, in the office of Balraj  

Singh; that the plaintiff informed him that he (plaintiff) could not arrange the  

entire funds for making full payment and therefore could not proceed with  

the sale; that defendant’s husband informed the plaintiff and Balraj Singh  

that he had come all the way from Rourkela to get the sale deed registered,  

and  it  was  evident  that  the  plaintiff  did  not  have  the  money  and  not  

interested in purchasing of  the  property and that  therefore the agreement  

stood  cancelled,  and  he  would  not  execute  the  sale  deed;  and   that  the  

defendant’s husband thereafter left for Rourkela and also wrote a letter to  

Balraj  Singh confirming the termination of the  agreement in view of the  

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plaintiff’s conduct on 7.6.1979. The defendant contended that as plaintiff  

was not ready and willing to perform the contract by paying the balance of  

the sale price and get the sale completed,  he was not entitled to specific  

performance; and that in view of the breach committed by the plaintiff, the  

earnest  money  amount  paid  by  him  stood  forfeited.  The  defendant  also  

contended that the suit was not maintainable as it was not filed by a duly  

authorized  person.  Subsequently  the  defendant  amended  her  written  

statement to contend that plaintiff was a Non-Resident Indian and he had not  

obtained the  permission of  the Reserve  Bank of  India  under the  Foreign  

Exchange  Regulation  Act,  1973,  and  therefore  he  was  not  entitled  to  

purchase any immovable property in India.  

5. On the said pleadings, the trial court framed the following issues:  

(1) Whether  the  suit  has  been  filed  by  a  duly  authorized  person?  

(2) Whether the suit is not maintainable in the present form?  

(3) Whether  the  suit  for  specific  performance  is  not  maintainable?  

(4) Whether  the  suit  is  hit  by  laches  and  delay?  If  so,  its  effect?  

(5) Whether  the  agreement  dated  20.10.1978  has  been  rescinded and the suit is thus not maintainable?  

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(6) Whether  the  plaintiff  is  estopped  by  his  own  act  and  conduct from filing the present suit?  

(7) Whether the time was the essence of the contract?   

(8) Whether  the  plaintiff  was  and  is  ready  and  willing  to  perform his part of the agreement? If not its effect?   

(9) Whether the plaintiff is entitled to the specific performance  and in alternative damages as claimed?   

(9A)Whether the suit is barred in view of preliminary objection  No.7 in the written statement?

(10) Relief.  

6. The parties went to trial on the said issues. On behalf of the plaintiff,  

his  attorney holder  Jagtar  Singh Sangha was examined as  PW1,  and the  

property  dealer  Balraj  Singh  was  examined  as  PW2.  On  behalf  of  the  

defendant,  her  husband  and  attorney  holder  Lt.  Col.  Kartar  Singh  was  

examined  as  DW-1.  After  appreciating  the  evidence,  the  trial  court  by  

judgment dated 15.3.1983, decreed the suit. It held that as the plaintiff had  

executed a power of attorney dated 1.3.1980 in favour of his brother Jagtar  

Singh Sangha and as Jagtar Singh Sangha has asserted in his evidence that  

he was the attorney holder of the plaintiff, and as Balraj Singh had given  

evidence that plaintiff executed the power of attorney in favour of Jagtar  

Singh Sangha in his presence, the suit was filed by a duly authorized person  

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and was maintainable. The trial court held that the time was not of essence  

of the contract; that defendant had failed to prove that the agreement dated  

20.10.1978 was rescinded; that the plaintiff had proved that he was ready  

and willing to perform his part of the contract; that the suit was not barred by  

time; that the Reserve Bank’s permission was not  necessary for obtaining a  

decree for specific performance, but was required only for execution of the  

sale deed in pursuance of a decree for specific performance; and therefore  

plaintiff was entitled to specific performance.  

7. The appeal filed by the defendant was dismissed by the District Judge,  

Chandigarh,  by  judgment  dated  3.6.1997  affirming  the  findings  of  fact  

recorded by the trial  court.  The second appeal filed by the appellant was  

dismissed by the Punjab & Haryana High Court, by the impugned judgment  

dated 26.10.1999. The appellant has challenged the said judgment in this  

appeal by special leave.  

8. The contentions of the appellant in brief are :  

(i) The plaintiff did not sign the agreement of sale nor sign the plaint, nor  

gave evidence. His attorney holder (Paramjit  Singh) who entered into the  

agreement of sale on behalf of the plaintiff and who represented the plaintiff  

initially,  was  not  examined.  The  second  attorney  holder  (Jagtar  Singh  

Sangha) examined as PW1 was not personally aware of the transaction and  

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admitted that he was not aware of what transpired prior to the execution of  

the power of  attorney in his  favour on 1.3.1980. There  was therefore  no  

acceptable  or  valid  evidence  about  the  readiness  and  willingness  of  the  

plaintiff to perform the contract. The courts below ought to have dismissed  

the suit by drawing a presumption that the plaintiff’s case was false and for  

non-compliance with Section 16(c) of the Specific Relief Act, 1963 as the  

plaintiff did not enter the witness box.  

(ii) The  agreement  of  sale  only  provided  for  damages  in  the  event  of  

breach  by  either  party.  The  agreement  (Clause  11)  provided  that  if  the  

vendor failed to perform his part of the contract by executing the sale deed  

and getting it registered on receiving the balance consideration, he shall be  

liable to pay double the amount of earnest money received by her from the  

purchaser. The agreement did not provide for specific performance in the  

event of breach by the vendor. The clear intention of the parties was that in  

the event of breach by the vendor, the purchaser will be entitled to double  

the earnest money (that is refund of earnest money plus liquidated damages  

of  Rs.10,000/-)  and  nothing  more.  Therefore,  even  if  breach   by  the  

appellant – vendor was made out, the remedy of respondent – purchaser was  

only to get Rs.20,000/- and not for specific performance.  

(iii) The  evidence  clearly  established  that  plaintiff  was  not  ready  and  

willing to perform the contract and committed breach and as a consequence,  

the defendant rescinded the contract. The courts below ignored the relevant  

evidence in this behalf and drew invalid inferences from the evidence. The  

courts below therefore ought to have dismissed  the suit.  

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Re : Contention (i)

9. Section 16(c) of the Specific Relief Act 1963 (‘Act’ for short) bars the  

specific performance of a contract in favour of a plaintiff who fails to aver  

and prove that he has performed or has always been ready and willing to  

perform the essential terms of the contract which are to be performed by him  

(other than terms of the performance of which has been prevented or waived  

by the defendant). Explanation (ii) to section 16 provides that for purposes  

of  clause  (c)  of  section  16,  the  plaintiff  must  aver  performance  of,  or  

readiness  and  willingness  to  perform,  the  contract  according  to  its  true  

construction. Thus in a suit for specific performance, the plaintiff should not  

only plead and prove the terms of the agreement, but should also plead and  

prove  his  readiness  and willingness  to  perform his  obligations  under  the  

contract  in  terms  of  the  contract.  (See  :  N.P.  Thirugnanam to  R.  Jagan  

Mohan  Rao –  AIR  1996  SC  116;  Pushparani  S.Sundaram  v.  Pauline  

Manomani  James -  2002  (9)  SCC  582;  and  Manjunath  Anandappa  v.   

Tammanasa - 2003 (10) SCC 390).  In the first case, this Court held :  

“The continuous readiness and willingness on the part of the plaintiff is a  condition  precedent  to  grant  the  relief  of  specific  performance.  This  circumstance is material and relevant and is required to be considered by  the court while granting or refusing to grant the relief. If the plaintiff fails  to either aver or prove the same, he must fail. To adjudge whether the  plaintiff is ready and willing to perform his part of the contract, the court  must  take  into  consideration  the  conduct  of  the  plaintiff  prior  and  subsequent  to  the  filing  of  the  suit  along  with  other  attending  

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circumstances.  The amount of  consideration which he has  to  ay to the  defendant must of necessity be proved to be available. Right from the date  of the execution till date of the decree he must prove that he is ready and  has always been willing to perform his part of the contract. As stated, the  factum of his readiness and willingness to perform his 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 contract.”

In  Vidhyadhar v. Manikrao - 1999 (3) SCC 573, this Court reiterated the  

following well recognized legal position:

“Where a party to the suit does not appear in the witness-box and state his  own case on oath and does not offer himself to be cross-examined by the  other side, a presumption would arise that the case set up by him is not  correct.”   

10. We may next refer to two decisions of this Court which considered the  

evidentiary value of the depositions of attorney holders. This Court in Janki   

Vashdeo Bhojwani  vs.  Indusind Bank Ltd.  –  2005 (2)  SCC 217,  held  as  

follows:  

“Order III, Rules 1 and 2 CPC, empowers the holder of power of attorney  to "act" on behalf of the principal. In our view the word "acts" employed  in Order III, Rules 1 and 2 CPC, confines only in respect of "acts" done by  the  power  of  attorney  holder  in  exercise  of  power  granted  by  the  instrument.  The  term  "acts"  would  not  include  deposing  in  place  and  instead of the principal.  In other words, if the power of attorney holder   has  rendered  some  "acts"  in  pursuance  of  power  of  attorney,  he  may   depose for the principal in respect of such acts, but he cannot depose for   the principal for the acts done by the principal and not by him. Similarly,   he cannot depose for the principal in respect of the matter which only the   principal  can have  a personal  knowledge and in  respect  of  which the   principal is entitled to be cross-examined.  

….In the case of Shambhu Dutt Shastri v. State of Rajasthan, 1986 2 WLN  713 (Raj) it was held that a general power of attorney holder can appear,  

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plead and act on behalf of the party but he cannot become a witness on  behalf of the party. He can only appear in his own capacity. No one can  delegate  the  power  to  appear  in  witness  box on behalf  of  himself.  To  appear in a witness box is altogether a different act. A general power of  attorney holder cannot be allowed to appear as a witness on behalf of the  plaintiff in the capacity of the plaintiff.  

The aforesaid judgment was quoted with the approval in the case of Ram  Prasad v. Hari Narain – AIR 1998 Raj 185. It was held that the word  "acts" used in Rule 2 of Order III of the CPC does not include the act of  power  of  attorney  holder  to  appear  as  a  witness  on behalf  of  a  party.  Power of attorney holder of a party can appear only as a witness in his  personal capacity and whatever knowledge he has about the case he can  state on oath but be cannot appear as a witness on behalf of the party in the  capacity of that party. If the plaintiff is unable to appear in the court, a  commission for recording his evidence may be issued under the relevant  provisions of the CPC. ….  

We hold that the view taken by the Rajasthan High Court in the case of  Shambhu Dutt Shastri followed and reiterated in the case of Ramprasad is  the correct view.”

In Shankar Finance & Investments vs. State of AP – (2008) 8 SCC 536, this  

Court explained in what circumstances, the evidence of an attorney holder  

would be relevant, while dealing with a complaint under section 138 of the  

Negotiable Instruments Act, 1881 signed by the attorney holder of the payee.  

This Court held :  

“A  power  of  attorney  holder  of  the  complainant,  who  does  not  have  personal knowledge, cannot be examined. But where the attorney holder  of the complainant is in charge of the business of the complainant and the  attorney  holder  alone  is  personally  aware  of  the  transactions,  and  the  complaint is signed by the attorney holder on behalf of the complainant  payee, there is no reason why the  attorney holder cannot be examined as  the  complainant…..In  regard  to  business  transactions  of  companies,  partnerships or proprietary concerns, many a time the authorized agent or  attorney holder may be the only person having personal knowledge of the  particular transaction; and if the authorized agent or attorney-holder has  signed  the  complaint,  it  will  be  absurd  to  say  that  he  should  not  be  

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examined under section 200 of the Code, and only the Secretary of the  company or the partner of the firm or the proprietor of a concern, who did  not have personal knowledge of the transaction, should be examined.”

11. To succeed  in  a  suit  for  specific  performance,  the  plaintiff  has  to  

prove: (a) that a valid agreement of sale was entered by the defendant in his  

favour and the terms thereof; (b) that the defendant committed breach of the  

contract; and (c) that he was always ready and willing to perform his part of  

the obligations in terms of the contract. If a plaintiff has to prove that he was  

always  ready  and  willing  to  perform his  part  of  the  contract,  that  is,  to  

perform his obligations in terms of the contract, necessarily he should step  

into the witness box and give evidence that he has all along been ready and  

willing  to  perform his  part  of  the  contract  and  subject  himself  to  cross  

examination on that issue. A plaintiff cannot obviously examine in his place,  

his  attorney  holder  who  did  not  have  personal  knowledge  either  of  the  

transaction or of his readiness and willingness. Readiness and willingness  

refer to the state of mind and conduct of the purchaser, as also his capacity  

and  preparedness  on  the  other.  One  without  the  other  is  not  sufficient.  

Therefore a third party who has no personal knowledge cannot give evidence  

about such readiness and willingness, even if he is an attorney holder of the  

person concerned.

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12. We  may  now summarise  for  convenience,  the  position  as  to  who  

should give evidence in regard to matters involving personal knowledge:  

(a) An attorney holder who has signed the plaint and instituted the suit,  

but  has  no  personal  knowledge  of  the  transaction  can  only  give  formal  

evidence about the validity of the power of attorney and the filing of the suit.  

(b) If the attorney holder has done any act or handled any transactions, in  

pursuance  of  the  power  of  attorney granted  by  the  principal,  he  may  be  

examined as a witness to prove those acts or transactions. If the attorney  

holder alone has personal knowledge of such acts and transactions and not  

the  principal,  the  attorney  holder  shall be  examined,  if  those  acts  and  

transactions have to be proved.  

(c) The attorney holder cannot depose or give evidence in place of his  

principal for the acts done by the principal or transactions or dealings of the  

principal, of which principal alone has personal knowledge.  

(d) Where the principal  at  no point  of  time had personally  handled or  

dealt with or participated in the transaction and has no personal knowledge  

of the transaction, and where the entire transaction has been handled by an  

attorney holder, necessarily the attorney holder alone can give evidence in  

regard  to  the  transaction.  This  frequently  happens  in  case  of  principals  

carrying  on  business  through  authorized  managers/attorney  holders  or  

persons  residing  abroad  managing  their  affairs  through  their  attorney  

holders.   

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(e) Where the entire transaction has been conducted through a particular  

attorney holder, the principal has to examine that attorney holder to prove  

the transaction, and not a different or subsequent attorney holder.  

(f) Where different attorney holders had dealt with the matter at different  

stages of the transaction, if evidence has to be led as to what transpired at  

those different stages, all the attorney holders will have to be examined.  

(g) Where the law requires or contemplated the plaintiff or other party to  

a proceeding, to establish or prove something with reference to his ‘state of  

mind’  or  ‘conduct’,  normally  the  person  concerned  alone  has  to  give  

evidence and not an attorney holder. A landlord who seeks eviction of his  

tenant,  on  the  ground  of  his  ‘bona  fide’  need  and  a  purchaser  seeking  

specific performance who has to show his ‘readiness and willingness’ fall  

under  this  category.  There  is  however  a  recognized  exception  to  this  

requirement.  Where  all  the  affairs  of  a  party  are  completely  managed,  

transacted and looked after by an attorney (who may happen to be a close  

family member), it may be possible to accept the evidence of such attorney  

even with reference to bona fides or ‘readiness and willingness’. Examples  

of such attorney holders are a husband/wife exclusively managing the affairs  

of his/her spouse, a son/daughter exclusively managing the affairs of an old  

and  infirm parent,  a  father/mother  exclusively  managing  the  affairs  of  a  

son/daughter living abroad.  

13. In  this  case,  the  matter  has  been  handled  by  different  persons  at  

different points of time on behalf of the plaintiff – (a) the negotiations and  

execution of agreement on 20.10.1978 were handled by plaintiff’s attorney  

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holder Paramjit Singh; (b) on 7.6.1979, the plaintiff was personally present  

and dealt  with the matter himself;  and (c) from 1.3.1980, the matter  was  

dealt  with  by  plaintiff’s  new  attorney  holder  Jagtar  Singh  Sangha.  The  

plaintiff neither signed the agreement of sale nor signed the plaint nor gave  

evidence, in particular, about his readiness and willingness. The agreement  

of sale was executed by plaintiff’s attorney holder Paramjit Singh who was  

not examined.  The plaint  was signed by plaintiff’s attorney holder Jagtar  

Singh Sangha (PW1) in whose favour plaintiff had executed the power of  

attorney on 1.3.1980 and who had no personal knowledge of the transaction.  

The  said  attorney  holder  (PW1)  was  not  aware  of  the  execution  of  the  

agreement, nor what happened till the last date fixed for performance had  

elapsed, nor what transpired on 7.6.1979.  The said attorney holder (PW1)  

clearly  stated  in  his  evidence  that  he  was  not  aware  of  anything  that  

transpired prior to 1.3.1980 when the power of attorney was executed in his  

favour. Nothing of relevance transpired after 1.3.1980 except the issue of the  

suit notice dated 5.3.1980. He did not know whether defendant committed  

breach nor did he know about the readiness and willingness of the plaintiff.  

He admitted in his evidence :  

“I do not know the detailed terms and conditions of the transaction…. I do  not know the facts of this transaction before my appointment in the year  1980….. I do not know whether plaintiff wrote any letter that he is ready  to purchase this plot…. I do not know if anybody else also did any bargain  

16

in the transaction or not. I do not know who has been in correspondence  on behalf of the plaintiff till June 1979”.  

The evidence of PW 1 is therefore of no assistance in a suit  for specific  

performance except to prove that he was authorized by the plaintiff to file a  

suit for specific performance.  

14. The plaintiff who ought to have given evidence never appeared and  

gave  evidence.  As  his  attorney  holder  PW1  had  no  knowledge  of  the  

transaction, the plaintiff solely relied on the evidence of the property dealer  

Balraj Singh (PW2) to prove the execution of the agreement, the terms of the  

agreement, his readiness and willingness to perform the agreement and the  

alleged  breach  by  the  defendant.  But  Balraj  Singh  cannot  become  a  

substitute for the plaintiff to give evidence about the finances or intentions  

or the readiness and willingness of plaintiff which were within the personal  

knowledge of the plaintiff. Balraj Singh was a property dealer engaged by  

plaintiff and supporting the plaintiff. He was not an attorney holder acting on  

behalf of plaintiff. Therefore, neither the evidence of Jagtar Singh (PW 1)  

nor the evidence of Balraj Singh (PW2) can be relied upon to prove that  

plaintiff was always ready and willing to perform his obligations under the  

contract, in terms of the contract. Therefore, it has to be held that though  

17

there  were  necessary  averments  in  the  plaint  about  the  readiness  and  

willingness of the plaintiff, and though PW1 and PW2 gave evidence about  

his readiness and willingness, the suit has to fail for failure to comply with  

section 16(c) of the Specific Relief Act, as there was no acceptable or valid  

evidence of such readiness and willingness of plaintiff to perform his part of  

the obligations in terms of the contract.

15. The respondent relied upon the following observation of this Court in  

P.D’Souza v. Shondrilo Naidu - 2004 (6) SCC 649 :   

“It is indisputable that in a suit for specific performance of contract the  plaintiff must establish his readiness and willingness to perform his part of  the contract. The readiness and willingness on the part of the plaintiff to  perform his part of contract would also depend upon the question as to  whether the defendant did everything which was required of him to be  done in terms of the agreement for sale. The question as to whether the  onus was discharged by the plaintiff or not will depend upon the facts and  circumstances of each case. No straitjacket formula can be laid down in  this behalf.”  

The respondent next relied upon the following observations of this Court in  

Aniglase Yohannan v. Ramlatha [2005 (7) SCC 534] :     

“12. The basic principle behind Section 16(c) read with Explanation (ii) is  that  any person seeking benefit  of  the *grant relief  on the basis of the  conduct  of the person seeking relief.  If  the pleadings manifest  that  the  conduct of the plaintiff entitles him to get the relief on perusal of the plaint  he should not be denied the relief.”

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This  Court  further  held  that  the  averments  relating  to  readiness  and  

willingness are not a mathematical formula which should be expressed in  

specific  words  and if  the  averments  in  the  plaint  as  a  whole,  do clearly  

indicate the readiness and willingness of the plaintiff to fulfil his part of the  

obligations under the contract, the fact that the wording was different, will  

not militate against the readiness and willingness of the plaintiff. The above  

observations cannot be construed as requiring only a pleading in regard to  

readiness  and  willingness  and  not  ‘proof’  relating  to  readiness  and  

willingness. In fact, in the very next para, this Court clarified that Section  

16(c) of the Act mandates the plaintiff to aver in the plaint and establish the  

fact  by  evidence aliunde that  he  has  always  been  ready  and  willing  to  

perform his part of the contract. Therefore, the decision merely reiterates the  

need for both pleadings and proof in regard to readiness and willingness of  

the plaintiff.  

16. The said decisions do no assist the respondent. The respondent also  

relied  upon  some  decisions  which  observe  that  increase  in  value  of  the  

property is not a relevant consideration to deny specific performance. On the  

facts and circumstances that issue does not arise for consideration in this  

case.    

19

Re : Contention (ii)

17. Section 10 of the Act deals with cases in which specific performance  

of contract is enforceable. It provides that except as otherwise provided in  

that Chapter (dealing with Specific Performance of Contracts) of the Act,  

specific performance of any contract may, in the discretion of the court, be  

enforced when the act agreed to be done is such that compensation in money  

for its non-performance would not afford adequate relief. Explanation (i) to  

section 10 provides that unless and until the contrary is proved, the court  

shall presume that the breach of a contract to transfer immovable property  

cannot be adequately relieved by compensation in money. Sub-sections (2)  

and  (5)  of  section  21  of  the  Act  provide  that  in  a  suit  for  specific  

performance, if the court decides that specific performance ought not to be  

granted,  but  that  there  is  a  contract  between the  parties  which  has  been  

broken by the defendant, and that the plaintiff is entitled to compensation for  

that breach, it shall award him such compensation accordingly; and that no  

compensation shall  be awarded under this section unless the plaintiff  has  

claimed such compensation in his plaint. Section 23 of the Act provides that  

a contract otherwise proper to be specifically enforced, may be so enforced,  

though a sum be named in it as the amount to be paid in case of its breach  

20

and the party in default is willing to pay the same, if the court, having regard  

to the terms of the contract and other attending circumstances, is satisfied  

that the sum was named only for the purpose of securing performance of the  

contract and not for the purpose of giving to the party in default an option of  

paying money in lieu of specific performance.  

18. It is thus clear that for a plaintiff to seek specific performance of a  

contract of sale relating to immovable property, and for a court to grant such  

specific performance, it is not necessary that the contract should contain a  

specific provision that in the event of breach, the aggrieved party will be  

entitled  to  specific  performance.  The Act makes  it  clear  that  if  the legal  

requirements for seeking specific enforcement of a contract are made out,  

specific performance could be enforced as provided in the Act even in the  

absence of  a  specific  term for  specific  performance  in  the  contract.  It  is  

evident from section 23 of the Act that even where the agreement of sale  

contains only a provision for payment of damages or liquidated damages in  

case of breach and does not contain any provision for specific performance,  

the party in breach cannot contend that  in view of specific  provision for  

payment  of  damages,  and  in  the  absence  of  a  provision  for  specific  

performance,  the  court  cannot  grant  specific  performance.  But where  the  

21

provision naming an amount to be paid in case of breach is intended to give  

to  the  party  in  default  an  option  to  pay  money  in  lieu  of  specific  

performance, then specific performance may not be permissible.  We may  

attempt to clarify the position by the following illustrations (not exhaustive):  

(A). The agreement  of  sale  provides that  in the event  of  breach by the   

vendor,  the  purchaser  shall  be  entitled  to  an  amount  equivalent  to  the   

earnest  money  as  damages.  The  agreement  is  silent  as  to  specific   

performance. In  such  a  case,  the  agreement  indicates  that  the  sum was  

named only for the purpose of securing performance of the contract. Even if  

there is no provision in the contract for specific performance, the court can  

direct specific performance by the vendor, if breach is established. But the  

court has the option, as per Section 21 of the Act, to award damages, if it  

comes  to  the  conclusion  that  it  is  not  a  fit  case  for  granting  specific  

performance.  

(B). The  agreement  provides  that  in  the  event  of  the  vendor  failing  to   

execute  a  sale  deed,  the  purchaser  will  not  be  entitled  for  specific   

performance but will only be entitled for return of the earnest money and/or   

payment of  a sum named as liquidated damages. As the intention of the  

parties  to  bar  specific  performance  of  the  contract  and provide  only  for  

damages in the event of breach, is clearly expressed, the court may not grant  

specific  performance,  but  can  award  liquidated  damages  and  refund  of  

earnest money.

(C). The agreement of sale provides that in the event of breach by either   

party the purchaser will be entitled to specific performance, but the party in  

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breach will have the option, instead of performing the contract, to pay a   

named amount as liquidated damages to the aggrieved party and on such   

payment, the aggrieved party shall not be entitled to specific performance.   

In such a case, the purchaser will not be entitled to specific performance, as  

the terms of the contract give the party in default an option of paying money  

in lieu of specific performance.  

19. In  this  case,  clauses  11  and  12  of  the  agreement  deal  with  

consequences of breach. They are extracted below :  

“11. That in case the seller fails to perform his part of contract of sale  according to the terms and conditions agreed upon in this agreement to sell  in matter of execution of the sale deed and its registration, on the receipt  of the balance sale price, he shall be liable to pay double the amount of the  earnest money received by her from the purchaser.

12. That in case the purchaser fails to get the transaction of the sale  completed by means of execution and registration of sale deed according  to the terms of this agreement for sale, he shall forfeit his earnest money  of Rs.10,000/- advanced by the purchaser to the said seller.”  

The agreement does not specifically provide for specific performance. Nor  

does it bar specific performance. It provides for payment of damages in the  

event of breach by either party. The provision for damages in the agreement  

is not intended to provide the vendor an option of paying money in lieu of  

specific  performance.  Therefore,  we are of the view that plaintiff  will  be  

entitled  to  seek  specific  performance  (even  in  the  absence  of  a  specific  

provision therefor) subject to his proving breach by the defendant and that  

23

he was ready and willing to perform his obligation under the contract,  in  

terms of the contract.  

Re : Contention (iii)

20. The time fixed for the performance in the agreement was 20.12.1978.  

But time was obviously not considered by the parties, to be of essence of the  

contract. The correspondence clearly shows that defendant’s attorney holder  

Lt.Col. Kartar Singh, was willing to perform the contract on 7.6.1979, nearly  

six  months  after  the  last  date  stipulated  in  the  agreement.  The  evidence  

shows that the defendant had entrusted the work of securing the necessary  

permission/NOC/clearance for the sale to the property dealer to Balraj Singh  

who was also acting on behalf of the plaintiff. Balraj Singh sent a telegram  

dated 2.6.1979 to Kartar Singh who was staying at Rourkela to come over to  

Chandigarh  on  7.6.1979  to  execute  the  sale  deed.  The  wording  of  the  

telegram  is  “Reach  Chandigarh  as  Mr.  Sangha  is  here.  Sale  deed  

registration is final. Date 7th June. No extension.” The evidence of DW1  

(Kartar Singh) and the evidence of Balraj  Singh (PW2) show that Kartar  

Singh accordingly visited Chandigarh on 7.6.1979 and met the plaintiff in  

the office of Balraj Singh on 7.6.1979. Kartar Singh’s evidence shows that  

he stated  that  he was  ready to  receive  the  balance of  the  sale  price  and  

execute the sale deed and had in fact came all the way from Rourkela to  

24

execute the sale deed, and that plaintiff told him that the entire amount was  

not available. Kartar Singh (DW1) also stated that after the meeting, plaintiff  

went away stating that he would try to arrange for money; that he (Kartar  

Singh) went back to the office of Balraj Singh at about 5.30 PM; that at that  

time,  Balraj  Singh showed the writing of  Sub-Registrar  (about  plaintiff’s  

presence and Kartar Singh’s absence); that he (Kartar Singh) got irritated by  

the conduct of plaintiff and told Balraj Singh to tell plaintiff that plaintiff  

was trying to be too clever, and he may treat the transaction as cancelled.  

Kartar Singh categorically stated :  

“He (plaintiff) did not give any proof of money with him. He did not buy  the stamp throughout the day and he did not show any inclination to buy. I  was fully ready to register the sale deed on 7.6.79.”

There is no evidence to rebut the said evidence of Kartar Singh as plaintiff  

was not examined.  

21. Balraj  Singh (PW2) who was examined as PW2 attempted to give  

some evidence about the readiness and willingness of the plaintiff. But the  

evidence of Balraj Singh can not be a substitute for the evidence of plaintiff  

regarding plaintiff’s readiness and willingness. Further the correspondence  

between Balraj Singh and Kartar Singh demonstrates that the version and  

stand of Kartar Singh (DW1) appears to be more probable and correct. After  

25

Kartar Singh returned from Chandigarh after the visit on 7.6.1979, by letter  

dated 29.6.1979 Balraj Singh informed Kartar Singh that the purchaser was  

now ready to get the sale deed executed in July 1979. Immediately, Kartar  

Singh sent a reply dated 2.7.1979 referring to his visit  to Chandigarh on  

7.6.1979 and about plaintiff informing him that full amount of sale price was  

not  available  with  him for  proceeding  with  the  sale,  which  showed  that  

plaintiff was not ready and willing to complete the sale. Balraj Singh sent a  

reply dated 7.7.1979 which does not deny the version given by Kartar Singh  

in  his  letter  dated  2.7.1979,  (as  to  what  happened  on  7.6.1979)  but  

concentrated on trying to persuade Kartar Singh to come again and execute  

the sale deed by receiving the higher price of Rs.1,60,000/- even without  

delivering possession.  The said letter dated 7.7.1979 of Balraj Singh also  

admits that marking the presence of plaintiff in the office of Sub- Registrar  

on 7.6.1979 was only to save the position of plaintiff. The said letter also  

states:  “Now  he  is  ready  to  pay  you  the  balance  amount,  considering  

Rs.160,000/-  as  the  sale  price”.  The  correspondence  therefore  clearly  

established  that  plaintiff  was  not  ready  and  willing  to  get  the  sale  deed  

executed within the time prescribed or even as on 7.6.1979 which was the  

last day of the extended period. The evidence also demonstrates that plaintiff  

was not in a position to perform the contract as Balraj Singh admits in his  

26

evidence that the purchaser had to purchase the stamp paper and that  on  

7.6.1979, the stamp paper was not purchased; and that the plaintiff had in his  

bank account  Rs.114000 but  that  amount  was  not  drawn from the  bank.  

Balraj Singh and PW1 have also referred to the assets owned by plaintiff.  

Such  evidence  is  of  no  assistance  in  the  absence  of  evidence  as  to  

availability of money for purchase and about the readiness and willingness  

of plaintiff to perform the contract.  

22. There is also something doubtful about the following version given by  

Balraj  Singh  (PW2)  in  his  evidence  as  to  what  happened  at  the  Sub-

Registrar’s office on 7.6.1979 :  

“Then we i.e. myself, Hartar Singh plaintiff, Paramjit Singh, all went to  the office of the Sub-Registrar. The plaintiff signed the application dated  7.6.1979 in my presence and likewise Paramjit Singh also signed the same  and we then submitted the same which is Ex.P21 to the Sub-Registrar,  Chandigarh. He then called Kartar Singh, through his Peon. Kartar Singh  did not appear before the Sub.Registrar, Chandigarh, who then made an  endorsement Ex.22 on the said application in my presence (objected to).  

In the plaint, the incident is described thus :  

“Ultimately,  the general attorney of the Defendant namely Kartar Singh  reached  Chandigarh  on  7.6.1979  and  the  plaintiff  was  also  there  in  Chandigarh on the said date. The said Kartar Singh who hold the general  attorney for the Defendant had disclosed that he had come on the said date  for execution of  the sale deed, but neither Kartar Singh nor the Defendant  came to the office of Sub-Registrar, Chandigarh to execute the sale deed  in  favour  of  the plaintiff  in  respect  of  the  above said plot,  though the  plaintiff remained present in the office of Sub-Registrar, Chandigarh on  the said day and got himself marked present by moving an application.”  

27

But Exs.21 and 22 (the letter dated 7.6.1979 to the Sub-Registrar containing  

the Sub-Registrar’s endorsement) reads thus :  

“To,  

The Sub-Registrar, Chandigarh.  

Sir,  

We, Hartar Singh Sangha, S/o Shri Bikramjit Singh Sangha and Ms. Avtar  Kaur D/o S. Charan Singh, 58, Sector-26, Madhya Marg, Chandigarh had  entered into agreement with Mrs.  Man Kaur,  wife of Shri  Jartar  Singh  through her general attorney and husband Major Kartar Singh for purchase  of her annexe No.509, Sector-18B, Chandigarh. Today is the last date for  the registration of  said annexe and we (Purchasers)  are  ready with the  payment  to pay the balance full  and final amount relating to the above  mentioned property before the Sub-Registration, but the seller herself or  through her general attorney have not turned up so far. We request you to  mark out presence in your court.  

Thanking you,  Yours faithfully,  

(Hartar Singh Sangha) (Avtar Kaur)

through attorney Paramjit Singh

Dated : 7.6.1979

The applicant  Hartar  Singh Sangha  is  present.  Respondent  Col.  Kartar  Singh name was called out, but was not found present.

(sd/-) Sub-Registrar”  

This letter describes plaintiff and Ms. Avtar Kaur, daughter of S. Charan  

Singh as purchasers and states that plaintiff and Ms. Avtar Singh entered  

28

into agreement with defendant for purchase of the property (Annexe No.509,  

Sector-18B, Chandigarh). The letter is said to have been signed by plaintiff  

and  Avtar  Singh  through  Paramjit  Singh  (Attorney  Holder).  There  is  

absolutely no reference or explanation either in the pleading or evidence as  

to  who  is  Ms.  Avtar  Kaur,  and  how she  became a  purchaser  under  the  

agreement of sale. There is also no explanation as to why Avtar Kaur and  

Paramjit Singh, if they were present on 7.6.1979, were not examined.  The  

said letter is not marked through either any of the sender or the receiver of  

the letter and has no evidentiary value.  

23. The learned counsel for the respondent contended that in terms of the  

agreement,  the  defendant  had  to  furnish  an  NOC  from  Chandigarh  

Administration, as also ULC clearance and income tax clearance required  

for the sale and there was nothing to show that she had obtained them, and  

therefore the question of plaintiff proving his readiness and willingness to  

perform his obligations did not arise. This contention has no merit. There are  

two distinct issues. The first issue is the breach by the defendant – vendor  

which  gives  a  cause  of  action  to  the  plaintiff  to  file  a  suit  for  specific  

performance. The second issue relates to the personal bar to enforcement of  

a specific performance by persons enumerated in section 16 of the Act. A  

29

person who fails to aver and prove that he has performed or has always been  

ready and willing to perform the essential terms of the contract which are to  

be performed by him (other than the terms the performance of which has  

been prevented or waived by the defendant) is barred from claiming specific  

performance. Therefore, even assuming that the defendant had committed  

breach, if the plaintiff fails to aver in the plaint or prove that he was always  

ready  and  willing  to  perform  the  essential  terms  of  contract  which  are  

required to be performed by him (other than the terms the performance of  

which  has  been  prevented  or  waived  by  the  plaintiff),  there  is  a  bar  to  

specific  performance  in  his  favour.  Therefore,  the  assumption  of  the  

respondent  that  readiness  and  willingness  on  the  part  of  plaintiff  is  

something which need not be proved, if the plaintiff is able to establish that  

defendant refused to execute the sale deed and thereby committed breach, is  

not correct. Let us give an example. Take a case where there is a contract for  

sale for a consideration of Rs.10 lakhs and earnest money of Rs.1 lakh was  

paid and the vendor wrongly refuses to execute the sale deed unless the  

purchaser is ready to pay Rs.15 lakhs. In such a case there is a clear breach  

by defendant.  But in that  case,  if  plaintiff  did not have the balance Rs.9  

lakhs  (and  the  money  required  for  stamp  duty  and  registration)  or  the  

capacity  to  arrange  and  pay  such  money,  when  the  contract  had  to  be  

30

performed, the plaintiff will not be entitled to specific performance, even if  

he proves breach by defendant, as he was not ‘ready and willing’ to perform  

his obligations.  

24. In this  case,  the evidence clearly  showed that  defendant’s  attorney  

holder Kartar Singh had entrusted the work of securing the clearances to the  

property dealer Balraj Singh, who was acting on behalf of plaintiff. This was  

within the knowledge of Paramjit  Singh,  who was the attorney holder of  

plaintiff  at  the  relevant  point  of  time.  Balraj  Singh  also  admitted  in  his  

evidence that he was to get the NOC and ULC clearance. Balraj Singh sent a  

telegram to Kartar Singh at the instance of plaintiff, asking him to come to  

Chandigarh on 7.6.1979 and execute the sale deed.  Therefore, Balraj Singh  

had either secured the certificates necessary for the sale or had deliberately  

called Kartar Singh to come over to Chandigarh, even though the plaintiff  

was not ready and the clearances had not been secured, to create evidence  

that plaintiff was ready. In neither case, the defendant could be faulted. Be  

that as it may.   

25. None of the courts below have referred to the relevant evidence or the  

significance of plaintiff not tendering evidence. They have merely gone by  

31

the evidence of Balraj Singh to hold that the plaintiff was ready and willing  

and defendant committed a breach. The material on record shows that the  

respondent-plaintiff committed breach. Therefore, the earnest money stood  

forfeited and respondent is not entitled for refund of the earnest money.  

Conclusion   

26. Having regard to our findings on contentions (i) and (iii), the appellant  

is bound to succeed in these appeals. We therefore allow these appeals, set  

aside the judgments  of the courts below and dismiss the suit  for specific  

performance.  

…………………………….J (R. V. RAVEENDRAN)

…………………………….J (AFTAB ALAM)

NEW DELHI; OCTOBER 5, 2010.   

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