REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.1077  OF 2009 (Arising out of SLP (C) No.6949 of 2005)

Azhar Sultana … Appellant

Versus

B. Rajamani & Ors. … Respondents

J U D G M E N T

S.B. Sinha, J.

1. Leave granted.

2. Subsequent purchasers who were arrayed at a later stage in a suit for

Specific  Performance  of  Contract  are  before  us  aggrieved  by  and

dissatisfied with a judgment and order dated 21.12.2004 passed by a learned

Single Judge of the High Court of Andhra Pradesh at Hyderabad allowing

the appeal from a judgment and order dated 21.7.1993 passed by the First

Additional  Judge,  City  Civil  Court,  Hyderabad  in  OS No.1436  of  1981

dismissing the suit of the plaintiff—appellant herein.

3. The factual matrix involved herein is as under :

The property in question admittedly belonged to one Ramesh Chand

Khanna, the original defendant.  An agreement of sale was entered into by

and between the appellant  and the  said  Ramesh Chand Khanna in  terms

whereof the suit land was agreed to be sold at the rate of Rs.325/- per sq. yd.

A sum of Rs.30,000/- was paid by way of advance.

4. It now stands admitted that on or about 7.12.1981, an application was

filed in terms of Section 27 of the Urban Land Ceiling and (Regulation) Act,

1970.  The said application was rejected.

It is also not in dispute that a suit was filed by one Bahadur Hussain

against the original defendant.  The said suit was decreed in favour of the

said Shri Bahadur Hussain.

5. Defendant Nos. 5 and 6 entered into a deed of sale dated 31.10.1981

with the said Ramesh Chand Khanna (since deceased) for a land measuring

217 sq.  yds. for a consideration calculated at  the  rate of  Rs.48,000/-  per

bigha  wherefor  negotiation  had  to  be  entered  into  for  settlement  of  the

dispute  by  and  between  Ramesh  Chand  Khanna  and  the  said  Bahadur

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Hussain.  Only after execution of the deed of sale, a notice was issued by

the appellant asking Shri Khanna to execute a deed of sale in his favour.   

The suit  for specific performance was filed on or about 7.12.1981.

As indicated hereinbefore, in the original  suit  the defendant  Nos.5 and 6

were  not  impleaded  as  parties.   A  written  statement  was  filed  by  Shri

Khanna on or about 30.8.1983 wherein he disclosed the factum of execution

of the deed of sale dated 31.10.1981.  The said defendants were impleaded

as parties.  One of the contentions raised by the said impleaded defendants

was that they were subsequent purchasers for value and without notice to

the original agreement for sale entered into by and between the appellants

and the said Shri Khanna.

6. In view of the pleadings of the parties, the learned Trial Judge framed

the following issues :

“1) Whether  the plaintiff is entitled for specific performance of agreement in respect of suit schedule property?

2) Whether the suit is barred by limitation?

3) To what relief?

Additional issues were also framed, viz. :

1) Whether the defendant No.6 is a bona fide purchaser  of  the  suit  property  for  value

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without notice of the suit agreement of sale in favour of the plaintiff?

2) Whether  the  suit  agreement  of  sale  is  not binding  on  the  defendants  including  the defendant Nos.5 and 6?”

The  learned  trial  Judge  decreed  the  suit,  inter  alia,  opining  that

defendant Nos.5 and 6 had knowledge about the agreement of sale entered

into by and between the plaintiff  and Khanna and, thus, the provision of

Section 19(b) of the Specific Relief Act was not attracted.   

Indisputably,  before  the  learned  Trial  Judge,  the  plaintiff-appellant

did  not  examine herself.   On her  behalf,  her  husband  who was  also  the

holder of a General Power of Attorney was examined.   

The learned Trial  Judge held the  agreement  dated 4.12.1978 to  be

enforceable.  It  was  furthermore  held  that  the  suit  was  not  barred  by

limitation.   It  was  observed  that  although  grant  of  a  decree  for  specific

performance of a contract is discretionary in nature but as the plaintiff had

paid a substantial amount, she should be held to be entitled thereto.   

The  defendant  Nos.5  and  6  preferred  an  appeal  thereagainst.   By

reason of the impugned judgment, as noticed hereinbefore, the High Court

allowed the said appeal.  The High Court formulated the following points

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for  its  consideration  in  terms of  Order  41 Rule 31 of  the Code of  Civil

Procedure, which are as under:

“1) Whether  plaintiff  is  entitled  to  seek enforcement  of  specific  performance  of Ex.A1, agreement of sale?

2) Whether  sixth  defendant  is  bona  fide purchaser  of  the  suit  schedule  property having paid her consideration in good faith and without notice of the original contract? And  

3) Whether the discretion of this Court ought not to be exercised in favour of the plaintiff for specific performance of Ex.A1?”

7. The Court in a suit for specific performance of contract is required to

pose unto itself the following questions, namely:

(1) Whether  the  agreement  of  sale  is  valid  and  binding  on  both  the

vendor and the vendee; and  

(2) Whether the plaintiff has all along been and still is ready and willing

to perform his part of the contract as envisaged under Section 16(c) of

the  Specific  Relief  Act,  1963  (hereinafter  referred  to  for  the  sake

brevity as ‘the Act’).

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8. It was, however, held that readiness and willingness on the part of the

plaintiff  to  perform  her  part  of  contract  having  been  conveyed  in  a

telegraphic notice (Exhibit A3); it was obligatory on the part of the plaintiff

—appellant  to  examine  herself  in  the  suit  and  as  she  did  not  examine

herself,  the  legal  requirements  envisaged under  Section  16(c)  of  the  Act

cannot be said to have been complied with.  It was furthermore held that as

no  evidence  was  adduced  to  establish  that  the  amount  of  consideration

which  was  required  to  be  paid  to  the  defendant  was  available  with  the

plaintiff, she was not ready and willing to perform her part of contract.  It

was  observed  that  for  the  aforementioned  purpose,  contents  of  the  legal

notice dated 16/20.11.1981 (Ex.A3) would not be decisive.  Noticing that

despite the fact that Section 27 of 1976 Act was declared ultra vires by this

Court  in  Maharao  Sahib  Shri  Bhim  Singhji;  Anantalakshmi  Pathabi

Ramasharma Yeturi & Ors.; Jodhan Real Estate Development Co. (P) Ltd.

& Anr.; Rajendra Garg Etc.; Shamshul Islam etc. v. Union of India & Anr.

[AIR 1981 SC 234] it was opined that as the said provision was very much

on statute book at the relevant time, the deed of sale could not have been

executed  without  obtaining  such  permission  and  even on  that  score,  the

plaintiff  appellant  cannot  derive  any advantage  to  establish  that  she  had

been ready and willing to perform her part of the contract.   

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The learned Judge was of the opinion that as no leave was obtained

by the plaintiff—appellant  in terms of Order VIII Rule 9 of the Code of

Civil Procedure to file subsequent written statement wherein, inter alia, it

was alleged that defendant  Nos.5 and 6 were subsequent  purchasers with

notice  of  the  earlier  agreement,  no  cognizance  thereof  should  have been

taken and, thus, the trial court must be said to have committed an error in

considering  the  same.   It  was  furthermore  opined  that  the  trial  Court

committed an error in concluding that there had been a collusion between

the first defendant, 6th defendant and Bahadur Hussain as would appear from

the fact that neither PW1 nor PW3 who examined themselves to support the

case of the plaintiff made any statement in that behalf nor was there any

pleading in the plaint to that effect.

It  was  furthermore  opined  that  as  the  said  defendants  were  in

possession  of  the  property  which  would  amount  to  a  notice  within  the

meaning of Section 3 of the Transfer of Property Act, the plaintiff would be

deemed to have knowledge thereabout.   

As  regards  the  second  point,  the  High  Court  opined  that  having

regard to Section 19(b) of the Act, the plaintiff could not be granted specific

performance  of  the  contract  as  against  the  said  respondent  who  was  a

subsequent bona fide purchaser for value and without notice in as much as

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DW1 categorically stated that defendant No.1 had no knowledge of the said

agreement for sale.   

So far as the third point which fell for determination of the learned

Judge of the High Court is concerned, it was held that as the 6th defendant

had purchased the property as far back as on 31.10.1981 and had been in

possession  enjoyment  thereof  for  more  than  30  years,  it  was  not  a  case

where the discretionary jurisdiction in terms of Section 20 of the Act should

be exercised in her favour.

10. Mr. Uday .U. Lalit, learned senior counsel appearing on behalf of the

appellant, in support of this appeal would urge :

1) It  was  not  necessary  for  the  plaintiff  to  examine  herself  as  her

husband  who  was  her  General  Power  of  Attorney  holder  was

examined and  particularly having regard to Section 120 of the Indian

Evidence Act.  

2) For the purpose of establishing the plea of readiness and willingness

on the part of the vendee, it was not necessary to prove that she had

enough liquid cash in her hand inasmuch as for the said purpose it

would be sufficient to show that she could arrange such an amount

for payment of consideration at the appropriate stage.

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3) Collusion by and between Shri Khanna and Defendant Nos.5 and 6 is

evident from the fact that the deed of sale was executed three years

after  the  execution  of  the  agreement  for  sale  only  for  a  sum  of

Rs.48,000/- although the amount of consideration on the basis of the

agreement for sale dated 4.12.1978 would have come to Rs.65,000/-

and out of which a sum of Rs.35,000/- had already been paid.

4) Defendant  Nos.5 and 6 prior  to their  purchase of  the lands  in  suit

having not made any enquiry nor having issued any public notice, the

onus  of  proof  that  they  were  bona  fide  purchasers  for  value  and

without notice, was on them.

5) The approach to the entire case on the part  of the High Court  was

wrong as would appear from the fact  that  although the subsequent

pleadings  were  held  to  be  irrelevant,  the  statements  made  in

paragraph  9  thereof  were  relied  upon  by  the  High  Court  for  the

purpose of showing that the statements made in paragraphs 5 and 6 of

the written statement had not been adverted to and, thus, would be

deemed to have been admitted, which even otherwise would amount

to misreading and misinterpretation of para nine of the rejoinder.

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11. Mr. Ranjit Kumar, learned senior counsel appearing on behalf of the

respondent, on the other hand, urged :

1) Keeping in view the peculiar facts and circumstances of this case, it is

not a fit case where this Court should exercise its jurisdiction under

Section 20 of the Specific Relief Act and in particular the fact that the

respondent had been living in the premises since 1981.

2) Reasons for payment of a lower amount of consideration in respect of

the suit premises must be considered as Shri Khanna had already lost

his suit in respect of the property to Bahadur Hussain and it was only

because  of  the  intervention  of  the  said  respondents,  Shri  Khanna

could execute the aforementioned deed of sale.

3) Since the agreement for sale dated 4.12.1978 itself stipulates that in

the event any defect in title is found, the vendee was only entitled to

obtain  refund  of  the  entire  amount  of  consideration,  a  decree  for

specific performance of contract could not have been granted to the

appellant.

4) Readiness  and willingness  on the part  of a vendee must be judged

from the entire backdrop of events upon taking into consideration the

fact that the plaintiff did not issue any notice and/or filed any suit for

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a a period of three years wherefrom it would be evident that he was

not  at  all  material  times  ready  and  willing  to  perform his  part  of

contract.

12. Execution  of  the  agreement  and/or  genuineness  thereof  is  not  in

question.   Plaintiff  indisputably in  view of  Section  16(c)  of  the  Specific

Relief Act, 1963 was required to make requisite averments that she had all

along been and still is ready and willing to perform her part of the contract

and also establish the same.   Shri Khanna in his written statement took a

specific defence that as the property was in litigation, plaintiff developed

cold feet and did not evince any interest to complete the sale transaction by

paying the balance of sale consideration.  Even after selling the property,

allegedly, the plaintiff’s representative was asked to take back the amount of

Rs.30,000/-.

13. We  would,  at  this  stage,  notice  the  averments  made  in  the  said

agreement for sale dated 4.12.1978 :

“(i) That  after  obtaining  the  permission  from Celing  Officer,  I  shall  execute  registration in favour of the Purchaser within 2 months. It  shall  be  my responsibility  to  obtain  the permission from the Ceiling Office.

(ii) That the sale property is free of all private and  public  charges  and  dues.   If  any

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detected, I shall be responsible to clear the same.   If  any  defect  in  title  is  found,  the entire advance money shall be returned.

(iii) That at  the time of the registration, I shall hand  over  the  possession  of  the  entire property to the purchaser.  The expenses of the  Registration  shall  be  borne  by  the purchaser.”

14. Indisputably, Khanna filed an application  for  grant  of approval  for

sale of the premises in question.  It was necessary as only in 1981, the said

provision was declared ultra vires.  In view of the fact that approval was

required to be obtained from the competent authority, the plaintiff could not

have  proceeded  on  the  assumption  that  the  suit  could  be  filed  within  a

period of three years from the date of refusal on the  part  of the original

defendant to execute the said deed of sale in terms of the agreement.

15. Defendant  Nos.5  and 6 were in  possession  of  the  properties.   The

deed of sale was a registered one.  Plaintiff, therefore, must be deemed to

have notice thereof in terms of Section 3 of the Transfer of Property Act.

She, however, neither in her notice nor in her plaint raised any question with

regard to the bona fide or otherwise of the transaction of sale entered into by

and  between  Shri  Khanna  and  the  respondent  Nos.5  and  6.   Prior  to

execution of the said deed of sale dated 30.10.1981, the suit filed by Khanna

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against  Bahadur  Hussain  was  dismissed  by  the  appellate  court  by  a

judgment and decree dated 30.11.1978.  There does not appear to be any

reason as to why the plaintiff cannot be said to have been not aware thereof.

It was, therefore, expected that not only the subsequent purchasers but also

Bahadur  Hussain  be  impleaded  as  parties  in  the  suit.   It  is  of  some

significance to notice that replication to the said written statement was filed

wherefor no leave was obtained.

16. Indisputably again, although the written statement was filed by Shri

Khanna  on  30.8.1983,  defendant  Nos.5  and 6  were  impleaded as  parties

only in the year 1987.  It is for the first time in the replication, the plaintiff

alleged that there had been a collusion by and between Khanna and Bahadur

Hussain.   Bahadur  Hussain,  however,  was  not  impleaded  as  a  party.

Replication was filed in 1991.   Such a contention has been raised only in

1991 which was impermissible in law.

17. It may be true that the name of the purchaser was not disclosed but

then it was open to the plaintiff to ask for other and better particulars of the

said statements.  Why she had to wait for a period of more than three years

for impeading the subsequent purchasers as parties has not been explained.

Even  an  application  for  injunction  was  filed  only  in  September  1985.

According to her husband, she came to learn about the sale of property in

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the name of defendant No.5 only on 29.9.1986.  Why an inquiry was not

made in the Registration Office although the deed of sale was a registered

one again defies anybody’s comprehension.  Readiness and willingness on

the part  of  the  plaintiff,  therefore,  is  required  to  be considered  from the

aforementioned backdrop of events.

18. Section 16(c) of the Specific Relief Act, 1963 postulates continuous

readiness  and  willingness  on  the  part  of  the  plaintiff.   It  is  a  condition

precedent for obtaining a relief of grant of specific performance of contract.

The  court,  keeping  in  view  the  fact  that  it  exercises  a  discretionary

jurisdiction, would be entitled to take into consideration as to whether the

suit had been filed within a reasonable time.  What would be a reasonable

time  would,  however,  depend  upon  the  facts  and  circumstances  of  each

case.  No hard and fast law can be laid down therefor.   

The  conduct  of  the  parties  in  this  behalf  would  also  assume

significance.  

In  Veerayee  Ammal v.  Seeni  Ammal [(2002)  1  SCC 134]  it  was

observed :

“11. When,  concededly,  the time was not  of  the essence of the contract, the appellant-plaintiff was required  to  approach  the  court  of  law  within  a

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reasonable  time.  A  Constitution  Bench  of  this Hon’ble Court in Chand Rani v. Kamal Rani held that in case of sale of immovable property there is no presumption as to time being of the essence of the  contract.  Even  if  it  is  not  of  the  essence  of contract,  the  court  may  infer  that  it  is  to  be performed in  a reasonable  time if  the conditions are (i) from the express terms of the contract; (ii) from the nature of the property; and (iii) from the surrounding  circumstances,  for  example,  the object of making the contract. For the purposes of granting  relief,  the  reasonable  time  has  to  be ascertained from all the facts and circumstances of the case.”

It was furthermore observed :

“13. The word “reasonable” has in law prima facie meaning  of  reasonable  in  regard  to  those circumstances  of  which  the  person  concerned  is called upon to act reasonably knows or ought to know  as  to  what  was  reasonable.  It  may  be unreasonable  to  give  an  exact  definition  of  the word  “reasonable”.  The  reason  varies  in  its conclusion  according  to  idiosyncrasy  of  the individual  and  the  time  and  circumstances  in which  he  thinks.  The  dictionary  meaning  of  the “reasonable  time”  is  to  be  so  much  time  as  is necessary,  under  the  circumstances,  to  do conveniently  what  the  contract  or  duty  requires should be done in a particular case. In other words it  means,  as soon as circumstances permit.  In  P. Ramanatha Aiyar’s The Law Lexicon it is defined to mean:  

‘A  reasonable  time,  looking  at  all  the circumstances of the case; a reasonable time under  ordinary  circumstances;  as  soon  as

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circumstances will permit; so much time as is  necessary  under  the  circumstances, conveniently  to  do  what  the  contract requires  should  be  done;  some  more protracted space than ‘directly’; such length of  time  as  may  fairly,  and  properly,  and reasonably  be  allowed  or  required,  having regard to the nature of the act or duty and to the  attending  circumstances;  all  these convey more or less the same idea.’ ”

19. It  is  also  a well  settled  principle  of  law that  not  only the original

vendor  but  also  a  subsequent  purchaser  would  be  entitled  to  raise  a

contention that the plaintiff was not ready and willing to perform his part of

contract. [See  Ram Awadh (Dead) by LRs. & Ors. v.  Achhaibar Dubey &

Anr. [(2000) 2 SCC 428 para 6]

20. We  are,  however,  in  agreement  with  Mr.  Lalit  that  for  the

aforementioned  purpose  it  was  not  necessary  that  the  entire  amount  of

consideration  should  be  kept  ready  and  the  plaintiff  must  file  proof  in

respect  thereof.   It  may also be correct  to contend that  only because the

plaintiff who is a Muslim lady, did not examine herself and got examined on

her behalf, her husband, the same by itself would lead to a conclusion that

she was not ready and willing to perform her part of contract.

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21. If the plaintiff has failed to establish that she had all along been ready

and willing to perform her part of contract, in our opinion, it would not be

necessary to enter into the question as to whether the defendant Nos.5 and 6

were bona fide subsequent purchasers for value without notice or not.   

22. Furthermore, grant of decree for specific performance of contract is

discretionary.  The contesting respondents herein are living in the property

since 1981 in their own right.  There is absolutely no reason as to why they

should be forced to vacate the said property at this juncture.

23. The plaintiff herself has taken a positive plea that there had been a

collusion between Khanna and Bahadur Hussain.  Such a case has neither

been  pleaded  nor  proved.   No  issue  in  this  behalf  was  framed.   Even

otherwise,  the question  of  the  defendant’s  discharging the  burden would

arise provided the plaintiff is found to be entitled to a decree for specific

performance of contract.   

24. We, however, agree with Mr. Lalit that the conduct of the respondent

was  not  good but,  similarly,  we cannot  lose  sight  of  the  conduct  of  the

appellants as well.  She had also not brought any evidence to show that she

did not have the notice of the said deed of sale.   

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We, therefore,  are  of  the  opinion  that  interest  of  justice  would  be

subserved if this Court refuses to exercise its discretionary jurisdiction in

terms of  Section  20 of  the Act,  directing  the  defendant  to  pay a sum of

Rs.60,000/- to the plaintiff which sum would include the amount of advance

paid by her.

25. The appeal is disposed of. In the facts and circumstances of this case,

however, there shall be no order as to costs.

...………………………J. [S.B. Sinha]

...………………………J. [Cyriac Joseph]

New Delhi; February 17, 2009

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