2025 INSC 1267 Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 1 of 39

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No……….. OF 2025

(Arising out of SLP (C) No. 26848-26849/2018)

ANNAMALAI …APPELLANT (S)

VERSUS

VASANTHI AND OTHERS …RESPONDENT(S)

J U D G M E N T

MANOJ MISRA, J.

1. Leave granted.

2. These two appeal(s) arise from two suits,

namely, O.S. No. 73 of 2010, which was instituted by

the appellant (Annamalai) against Saraswathi (for

short D-1), Dharmalingam (for short D-2) and

Vasanthi (for short D-3), inter-alia, for specific

performance of agreement for sale dated 08.01.2010,

and O.S. No. 32 of 2011 (renumbered O.S. No. 60 of

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 2 of 39

2012), which was instituted by Vasanthi (first

respondent) against the appellant (Annamalai) for

declaration as well as injunction qua the property

which was subject matter of the sale agreement. Trial

court consolidated the two suits and decided them by

a common judgment, whereby O.S. No. 73 of 2010 was

dismissed and O.S. No. 60 of 2012 (old O.S. No. 32 of

2011) was decreed. Aggrieved therewith, the appellant

filed two first appeal(s). The first appellate court vide

common judgment dated 14.11.2014 allowed the

appeal(s) and thereby decreed O.S. No.73 of 2010 and

dismissed O.S. No. 60 of 2012 (old O.S. No.32 of

2011). Against the first appellate court’s judgment

and decree(s), two second appeal(s), namely, S.A. No.

465 of 2015 and S.A. No. 466 of 2015, were filed by

Vasanthi (i.e., the first respondent) before the High

Court of Judicature at Madras

1. Both the appeals were

allowed vide impugned common judgment and

order(s) dated 02.02.2018. As a result, the decree of

specific performance of the agreement was set aside

1

High Court

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and defendant(s) were directed to refund the earnest

money along with interest.

3. Being aggrieved by High Court’s decision

dated 02.02.2018, these appeal(s) have been filed with

a prayer that the impugned judgment and decree(s) be

set aside.

Suit No.73 of 2010

4. Appellant instituted O.S. No. 73 of 2010

alleging, inter alia, that the suit property originally

belonged to Ponnusamy and his daughter Selvi; they

executed registered power(s) of attorney (for short

‘power’) in favour of the appellant and Saraswathi (D-

1); ‘power’ for the first item of the suit schedule

property was with D-1 whereas ‘power’ for the second

item was with the appellant; based on that ‘power’,

second item was sold to D-1 and his son

Dhamalingam (D-2) vide sale deed dated 07.07.2009;

thereafter, vide registered agreement for sale dated

08.01.2010, D-1, as ‘power’ holder of Ponnusamy and

Selvi qua first item and as co-owner of second item,

and D-2 agreed to sell both items to the appellant for

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Rs. 4,80,000; out of which, Rs. 4,70,000 was paid in

advance and balance of Rs. 10,000 was to be paid

within six months, though the possession of the

property was handed over to the appellant on the date

of the agreement; however, later, D-1 and D-2

demanded additional amount of Rs.2,00,000 against

which, to buy peace, the appellant agreed to pay, and

paid additional Rs.1,95,000 to D-1 and D-2 on

09.06.2010 and an endorsement to that effect was

made by them on the back of the agreement; in

consequence, the sale consideration increased from

Rs.4,80,000 to Rs.6,75,000, out of which Rs.6,65,000

stood paid and Rs.10,000 remained to be paid on

execution of sale deed; but, on 20.08.2010, D-1 and

D-2 sent notice cancelling/ terminating the contract;

to which, the appellant responded, vide notice dated

04.09.2010, by demanding execution of the sale deed,

inter alia, claiming that the appellant had been

throughout ready and willing to pay the balance

amount of Rs. 10,000; later, it came to the knowledge

of the appellant that D-1 and D-2 had already sold the

first item of the suit schedule property to D-3 on

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17.08.2010; whereafter, the defendants tried to

trespass the suit property, as a result a complaint was

lodged with police authorities; and, ultimately, the

suit was instituted.

4.1. In the written statement filed in O.S. No. 73 of

2010, defendants, inter alia, resiled from the

agreement dated 08.01.2010 and claimed that it was

an instrument to secure a loan. They also denied the

possession of the appellant over the suit property.

Suit No.32 of 2011 (New No. 60 of 2012)

5. In O. S. No. 32 of 2011 (New No. 60 of 2012)

Vasanthi (i.e., plaintiff therein – D-3 in O.S. No.73 of

2010) claiming herself as owner in possession of the

suit property, being a bona fide purchaser thereof,

sought a declaration and injunction to protect her

possession over the suit property.

5.1. The appellant, who was sole defendant in the

suit instituted by Vasanthi, inter alia, claimed that

Vasanthi is neither in possession nor a bona fide

purchaser for value; she, being daughter of

Saraswathi (D-1 in O.S. No.32 of 2011), was fully

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 6 of 39

aware of the prior agreement and, therefore, the sale

in her favour is nothing but sham.

Trial Court’s Decision

6. The aforesaid two suits were consolidated and

decided by a common judgment and decree(s) dated

15.02.2013. O.S. No. 73 of 2010 was dismissed, inter

alia, holding that - (a) the agreement for sale, dated

08.01.2010, was one to secure loan since it is

unbelievable that after having paid Rs.4,70,000 out of

a total consideration of Rs.4,80,000, a person would

wait for six months for execution of sale deed; (b) the

plaintiff was not ready and willing to perform his part

under the agreement since no notice to execute a deed

of sale was served on D-1 and D-2 within six months;

(c) the endorsement regarding payment of extra

consideration of Rs. 1,95,000 was prepared by using

signature(s) of D-1 and D-2 obtained earlier; (d) the

possession of the suit property was not handed over

to Annamalai (the appellant) as there is no recital in

the agreement evidencing transfer of possession; (e)

even if the agreement dated 08.01.2010 is considered

to be an agreement for sale, it was not acted upon

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within six months and time being the essence of the

contract, it was justifiably terminated; hence, suit

was liable to be dismissed.

6. 1. As regards O.S. No. 32 of 2011 (new no. 60 of

2012), it was held that Vasanthi is owner in

possession of the suit property purchased by her.

Consequently, O.S. No.32 of 2011 was decreed.

First Appellate Court’s decision

7. Aggrieved by trial court’s verdict, Annamalai

(the appellant herein) went in appeal. The first

appellate court held that the view of the trial court

that the agreement dated 08.01.2010 was to secure a

loan is perverse more so when notice dated

20.08.2010 (Exb. A-4), sent on behalf of D-1 and D-2,

acknowledges existence of the agreement for sale as

well as receipt of advance consideration of Rs.

4,70,000. The first appellate court also accepted the

endorsement (Exb.A-2) on the back of the agreement

(Exb.A-1) as an acknowledgment of receipt of

additional Rs. 1,95,000 and found thus: (a) the

agreement dated 08.01.2010 is an agreement for sale;

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(b) out of a total of Rs.4,80,000 payable towards

consideration, Rs.4,70,000 was paid in advance, but

D-1 and D-2 sought additional Rs. 2,00,000; (c)

plaintiff, however, agreed to pay Rs.1,95,000, which

was paid to D-1 and D-2 who accepted the same and

made an endorsement to that effect on the back of the

agreement on 9.06.2010; (d) in such circumstances,

the plaintiff has established his readiness and

willingness to perform its part under the contract; and

(e) D-3 (Vasanthi), being daughter of D-1, is not a bona

fide purchaser for value more so when sale-deed was

executed in her favour on 17.08.2010, that is, even

before termination of the agreement dated

08.01.2010.

7.1. In consequence, the first appellate court

reversed the decree passed by the trial court and

decreed the suit of the appellant for specific

performance; whereas, the suit of Vasanthi was

dismissed.

High Court’s decision

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8. Against the judgment and decree(s) of the first

appellate court, two second appeals were filed before

the High Court, namely, (a) S. A. No. 465 of 2015 by

Saraswathi (D-1), Dharmalingam (D-2) and Vasanthi

(D-3) against Annamalai, emanating from O.S. No. 73

of 2010, and (b) S. A. No. 466 of 2015 by Vasanthi

against Annamalai, emanating from O.S. No. 32 of

2011 (New No. 60 of 2012). High Court allowed both

the appeals and directed refund of the advance

consideration with interest. While allowing the second

appeal(s), High Court, inter alia, found - (i) there is no

oral or documentary evidence to show that Annamalai

came into possession of the suit property pursuant to

the sale agreement; (ii) Annamalai did not show any

intention to execute the sale-deed within six months

of the sale agreement, therefore, it could be taken that

plaintiff was not ready and willing to perform its part

under the contract; and (iii) the receipt of Rs. 1,95,000

(Exb. A-2) appears to have been created after

termination notice (Exb. A-4) was served. Based on

those findings, the High Court held Annamalai (i.e.,

the appellant) not entitled to the relief of specific

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 10 of 39

performance. Consequently, the second appeal(s)

were allowed, and the decree of specific performance

was set aside with a direction to refund the earnest

money.

9. We have heard learned counsel for the parties

and have perused the record carefully.

Submissions on behalf of the appellant

10. On behalf of the appellant, it has been

strenuously argued that findings of the first appellate

court qua (i) execution of the agreement for sale; (ii)

payment of advance consideration including

additional amount of Rs. 1,95,000; and (iii) plaintiff

being ready and willing to perform the terms and

conditions of the contract, were based on appreciation

of evidence on record and by no stretch of imagination

could be considered perverse or illegal as to give rise

to a substantial question of law warranting exercise of

powers under Section 100 of the Code of Civil

Procedure, 1908

2. Further, in a contract to sell

immovable property, ordinarily, time is not the

2

CPC

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 11 of 39

essence of the contract. Moreover, when more than

90% of the agreed sale consideration was already paid

and the defendant(s) had accepted additional

Rs.1,95,000, the question of plaintiff not being ready

and willing does not arise. Besides above, having

accepted additional amount of Rs.1,95,000, after

expiry of six months, there was no occasion to

terminate the agreement for delayed /non-payment of

Rs.10,000. In such circumstances, it was not a case

where the court could have declined the relief of

specific performance, that too, when conduct of the

defendants was not bona fide. Accordingly, it was

prayed that the impugned judgment and decree(s) of

the High Court be set aside and that of the first

appellate court be restored.

Submissions on behalf of respondent(s)

11. Per contra, learned counsel for the respondent

submitted that the appellant is not entitled to

discretionary relief of specific performance, inter alia,

because,- (i) a false case was set up that the

possession of the property was handed over to the

plaintiff at the time of entering the contract; (ii) a

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 12 of 39

fabricated document showing receipt of an additional

sum of Rs. 1,95,000 was set up; (iii) the appellant took

no steps within six months of the agreement to seek

execution of sale deed, therefore, plaintiff cannot be

said to be ready and willing to perform its part under

the agreement; (iv) once the contract was terminated,

suit for specific performance was not maintainable

without seeking a declaration that termination of the

agreement was invalid. Based on above, the

respondent(s) prayed that the appeal(s) be dismissed.

Issues for consideration

12. Upon consideration of the rival submissions

and having regard to the facts of the case, in our view,

following issues arise for our consideration:

A. Whether the High Court was justified in

interfering with the finding of the first appellate

court qua payment of additional amount of Rs.

1,95,000 by the plaintiff-appellant? If receipt of

additional payment by D-1 and D-2 is proved, as

found by the first appellate court, whether it could

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 13 of 39

be held that plaintiff was not ready and willing to

perform its part under the contract?

B. Whether the suit for specific performance was

maintainable without seeking a declaration that

termination of the agreement was invalid in law?

C. Whether in the facts of the case the plaintiff was

entitled to the discretionary relief of specific

performance?

Discussion/ Analysis

13. Before we set out to address the aforesaid

issues, it would be useful to notice the reasons

recorded by the first appellate court to reverse trial

court’s finding that the agreement for sale was a

document to secure a loan. Reasons are:

(a) agreement for sale is a registered document,

therefore a presumption of correctness of the

endorsement made by the Registrar regarding

particulars entered therein would arise;

(b) there is no clear and cogent evidence to

substantiate fraud or to dislodge the presumption;

and

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 14 of 39

(c) notice dated 20.08.2010 (Exb. A-4) sent on

behalf of Saraswathi (D-1) and Dharmalingam (D-

2) acknowledges the instrument dated 08.01.2010

as an agreement for sale.

13.1. Importantly, the finding of the first appellate

court that instrument dated 08.01.2010 (Exb. A-1)

was an agreement for sale of immovable property

fixing consideration at Rs.4,80,000 and

acknowledging receipt of Rs. 4,70,000 by way of

advance, has not been disturbed by the High Court.

Rather, the High Court itself directed for refund of the

advance money.

Issue A

14. The High Court allowed the second appeal(s),

inter alia, on the ground that, as per the agreement,

the sale deed had to be executed within six months on

payment of balance consideration, therefore time was

of the essence of the contract, and since, within six

months, neither balance amount was paid nor

execution of sale deed demanded, the plaintiff (i.e., the

appellant herein) cannot be considered ready and

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 15 of 39

willing to perform its part under the agreement. While

holding so, the High Court discarded the endorsement

of receipt of Rs.1,95,000 (Exb. A-2) made on the back

of the agreement (Exb. A-1) by observing that no

evidence was led to prove the endorsement.

15. In our view, the High Court committed a

mistake in discarding the endorsement (Exb.A-2).

While discarding the same, it overlooked the finding of

the first appellate court in paragraph 29 of its

judgment which reflected that D-1 and D-2 had

admitted their signature(s) on the page carrying the

endorsement of receipt of Rs.1,95,000 by claiming

that those were obtained on a blank paper. In our

view, once existence of signature(s) on a document

acknowledging receipt of money is admitted, a

presumption would arise that it was endorsed for good

consideration

3. Therefore, a heavy burden lay on D-1

and D-2 to explain the circumstances in which their

signatures or thumbmark, as the case may be,

appeared there, particularly, when that endorsement

was on the back of a registered document.

3

See: Section 114 of Indian Evidence Act, 1872 read with Illustration (c) thereto.

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 16 of 39

16. Whether D-1 and D-2 were able to discharge

the aforesaid burden is a question of fact which had

to be determined by a court of fact after appreciating

the evidence available on record. Under CPC, a first

appellate court is the final court of fact. No doubt, a

second appellate court exercising power(s) under

Section 100 CPC can interfere with a finding of fact on

limited grounds, such as, (a) where the finding is

based on inadmissible evidence; (b) where it is in

ignorance of relevant admissible evidence; (c) where it

is based on misreading of evidence; and (d) where it is

perverse. But that is not the case here.

17. In the case on hand, the first appellate court,

in paragraph 29 of its judgment, accepted the

endorsement (Exb. A-2) made on the back of a

registered document (Exb. A-1) after considering the

oral evidence led by the plaintiff-appellant and the

circumstance that signature(s)/thumbmark of D-1

and D-2 were not disputed, though claimed as one

obtained on a blank paper. The reasoning of the first

appellate court in paragraph 29 of its judgment was

not addressed by the High Court. In fact, the High

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Court, in one line, on a flimsy defense of use of a

signed blank paper, observed that genuineness of

Exb. A-2 is not proved. In our view, the High Court

fell in error here. While exercising powers under

Section 100 CPC, it ought not to have interfered with

the finding of fact returned by the first appellate court

on this aspect; more so, when the first appellate court

had drawn its conclusion after appreciating the

evidence available on record as also the circumstance

that signature(s)/thumbmark(s) appearing on the

document (Exb.A-2) were not disputed. Otherwise

also, while disturbing the finding of the first appellate

court, the High Court did not hold that the finding

returned by the first appellate court is based on a

misreading of evidence, or is in ignorance of relevant

evidence, or is perverse. Thus, there existed no

occasion for the High Court, exercising power under

Section 100 CPC, to interfere with the finding of the

first appellate court regarding payment of additional

Rs. 1,95,000 to D-1 and D-2 over and above the sale

consideration fixed for the transaction.

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18. Once the finding regarding payment of

additional sum of Rs.1,95,000 to D-1 and D-2

recorded by the first appellate court is sustained,

there appears no logical reason to hold that the

plaintiff (Annamalai) was not ready and willing to

perform its part under the contract particularly when

Rs. 4,70,000, out of total consideration of Rs.

4,80,000, was already paid and, over and above that,

additional sum of Rs.1,95,000 was paid in lieu of

demand made by D-1 & D-2. This we say so, because

an opinion regarding plaintiff’s readiness and

willingness to perform its part under the contract is to

be formed on the entirety of proven facts and

circumstances of a case including conduct of the

parties

4. The test is that the person claiming

performance must satisfy conscience of the court that

he has treated the contract subsisting with

preparedness to fulfil his obligation and accept

performance when the time for performance arrives

5.

4

See: R.C. Chandiok and another v. Chuni Lal Sabharwal and others, (1970) 3 SCC 140, paragraph 6; followed

in Syed Dastagir v. T.R. Gopalakrishna Setty, (1999) 6 SCC 337, paragraph 13.

5

Ardeshir H. Mama v. Flora Sassoon, AIR 1928 PC 208 = 1928 SCC OnLine PC 43; followed in A.

Kanthamani v. Nasreen Ahmed, (2017) 4 SCC 654

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 19 of 39

19. In the instant case, the plaintiff was required

to pay only Rs.10,000, out of a total of Rs.4,80,000,

within six months from the date of the agreement (i.e.,

8.01.2010). However, within that period, D-1 & D-2

demanded additional Rs.2,00,000. To buy peace,

additional Rs.1,95,000 was paid by the plaintiff on

09.06.2010 regarding which endorsement was made

by D-1 and D-2 on the back of the agreement. No

doubt, balance of Rs.10,000 remained but, by

accepting additional amount after expiry of six

months, D-1 and D-2 treated the agreement as

subsisting and thereby waived their right to forfeit the

earnest money on non-payment of balance

consideration within six months from the date of the

agreement.

20. Generally, time is presumed not to be the

essence of the contract relating to immovable

property. Therefore, onus to plead and prove that time

was the essence of the contract is on the person

alleging it. In cases where notice is given treating time

as the essence of the contract, it is duty of the court

to examine the real intention of the party giving such

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 20 of 39

notice by looking at the facts and circumstances of

each case

6. Here, D-1 and D-2 accepted additional

payment of Rs.1,95,000 after expiry of the period of

six months stipulated for making payment of balance

amount of Rs.10,000, and made endorsement to that

effect on the back of the agreement, thereby signifying

that they treat the agreement as subsisting by waiving

their right to forfeit the earnest money on non-

payment of balance consideration within six months

7.

In such circumstances, in our view, non-issuance of

notice by the plaintiff, requesting performance within

six months, would not be fatal to the suit for specific

performance and, likewise, it would not be

determinative of whether the plaintiff was ready and

willing to perform its part under the contract.

Consequently, if the first appellate court held that the

plaintiff was ready and willing to perform its part

under the contract, no fault can be found with its

view. In our view, the High Court exceeded its

jurisdiction under Section 100 CPC by interfering with

6

Swarnam Ramachandran (Smt.) and another v. Aravacode Chakungal Jayapalan, (2004) 8 SCC 689.

7

See: Section 55 of the Contract Act, 1872.

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 21 of 39

the finding(s) of the first appellate court regarding (a)

payment of additional Rs.1,95,000 by plaintiff to D-1

and D-2 and (b) plaintiff being ready and willing to

perform its part under the contract. Issue A is decided

in the aforesaid terms.

Issue B

21. Regarding maintainability of the suit for

specific performance without seeking a declaratory

relief qua subsistence of the contract, at the outset,

we may observe that no specific plea to that effect was

raised in the written statement and no issue was

struck in respect thereof. However, as the issue was

raised during arguments, we shall address the same.

22. To appropriately address the said issue, we

must recapitulate the facts. Agreement for sale was

entered on 08.01.2010. Sale consideration was fixed

at Rs.4,80,000. Rs.4,70,000 was paid in advance.

Balance Rs.10,000 had to be paid within six months.

Although the agreement, translated copy of which is

placed on record, neither speaks of automatic

termination of contract nor confers right on the

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 22 of 39

vendors (i.e., D-1 and D-2) to unilaterally terminate

the same for non-payment of balance consideration

within the specified period of six months, stipulates

that if balance consideration is not paid within six

months, the vendee would lose its earnest money.

That is, it speaks of forfeiture of earnest money for

non-deposit of balance consideration. Assuming that

vendor(s) had a right to terminate the contract and

forfeit the earnest money for non-payment of balance

amount within six months, nothing of the kind was

done by the vendor. Rather, as found above, the

vendor(s) (i.e., D-1 and D-2) took additional amount of

Rs.1,95,000 after expiry of six months and made an

endorsement to that effect on the back of the

agreement.

23. Section 55 of the Indian Contract Act, 1872

provides for effect of acceptance of performance at a

time other than agreed upon. It says:

“If, in case of a contract voidable on

account of the promisor’s failure to perform

his promise at the time agreed, the promisee

accepts performance of such promise at any

time other than agreed, the promisee

cannot claim compensation for any loss

occasioned by the non-performance of the

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 23 of 39

promise at the time agreed, unless, at the

time of acceptance, he gives notice to the

promiser of his intention to do so.”

24. In the case on hand, there was no notice of

the kind as envisaged by Section 55 (supra) issued by

the vendor(s). In fact, the termination notice itself was

issued on 20.08.2010 when D-1 and D-2 had already

breached the contract by transferring part of the

property agreed to be sold to D-3 on 17.08.2010.

Moreover, in our view, by making an endorsement of

receipt of Rs.1,95,000 at the back of the contract on

09.06.2010, the vendors not only acknowledged the

subsistence of the contract but also waived their right

to terminate the same or forfeit the advance payment

of Rs.4,70,000 on non-payment of balance Rs.10,000

within six months from the date of the contract. In

this context, we will have to consider whether the

termination notice dated 20.08.2010 created a cloud

on the right of the plaintiff that necessitated a

declaratory relief. If it did, whether in absence of a

declaration, a decree of specific performance could be

passed.

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When a declaratory relief is essential

25. A declaratory relief seeks to clear what is

doubtful, and which is necessary to make it clear. If

there is a doubt on the right of a plaintiff, and without

the doubt being cleared no further relief can be

granted, a declaratory relief becomes essential

because without such a declaration the consequential

relief may not be available to the plaintiff

8. For

example, a doubt as to plaintiff’s title to a property

may arise because of existence of an instrument

relating to that property. If plaintiff is privy to that

instrument, Section 31 of Specific Relief Act, 1963

enables him to institute a suit for cancellation of the

instrument which may be void or voidable qua him. If

plaintiff is not privy to the instrument, he may seek a

declaration that the same is void or does not affect his

rights. When a document is void ab initio, a decree for

setting aside the same is not necessary as the same is

non est in the eye of law, being a nullity. Therefore, in

such a case, if plaintiff is in possession of the property

8

See: Anathula Sudhakar v. P. Buchi Reddy (dead) by L.R.s. and others, (2008) 4 SCC 594

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 25 of 39

which is subject matter of such a void instrument, he

may seek a declaration that the instrument is not

binding on him. However, if he is not in possession,

he may sue for possession and the limitation period

applicable would be that as applicable under Article

65 of the Limitation Act, 1963 on a suit for

possession

9. Rationale of the aforesaid principle is

that a void instrument /transaction can be ignored by

a court while granting the main relief based on a

subsisting right. But, where the plaintiff’s right falls

under a cloud, then a declaration affirming the right

of the plaintiff may be necessary for grant of a

consequential relief. However, whether such a

declaration is required for the consequential relief

sought is to be assessed on a case-to-case basis,

dependent on its facts.

26. A breach of a contract may be by non-

performance or by repudiation, or by both. In Anson’s

Law of Contract (29

th Oxford Edn.), under the heading

9

See: Prem Singh v. Birbal, (2006) 5 SCC 353; followed in Shanti Devi (since deceased) through LRs v. Jagan

Devi and others, 2025 SCC OnLine SC 1961

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 26 of 39

“Forms of Breach Which Justify Discharge”, it is stated

thus:

“The right of a party to be treated as discharged

from further performance may arise in any one

of three ways: the other party to the contract (a)

may renounce its liabilities under it; (b) may by

its own conduct make it impossible to fulfill

them, (c) may fail to perform what it has

promised. Of these forms of breach, the first two

may take place not only in the course of

performance but also while the contract is still

wholly executory i.e., before either party is

entitled to demand a performance by the other

party of the other’s promise. In such a case the

breach is usually termed an anticipatory breach.

The last can only take place at or during the time

for performance of the contract.”

27. Ordinarily, for a breach of contract, a party

aggrieved by the breach i.e., failure on the part of the

other party to perform its part under the contract can

claim compensation or damages by accepting the

breach as a termination of the contract, or/ and, in

certain cases, obtain specific performance by not

recognizing the breach as termination of the

contract

10. In a case where the contract between the

parties confers a right on a party to the contract to

unilaterally terminate the contract in certain

10

See: OPG Power Generation Private Limited v. Enexio Power Cooling Solutions India Pvt. Ltd and another,

(2025) 2 SCC 417, paragraph 106.

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 27 of 39

circumstances, and the contract is terminated

exercising that right, a mere suit for specific

performance without seeking a declaration that such

termination is invalid may not be maintainable. This

is so, because a doubt /cloud on subsistence of the

contract is created which needs to be cleared before

grant of a decree enforcing contractual obligations of

the parties to the contract.

28. Now we shall consider few decisions of this

Court where the question of grant of relief of specific

performance of a contract in teeth of termination of

the contract without seeking a declaration qua

subsistence of the contract was considered. In I.S.

Sikandar v. K. Subramani

11, the agreement for sale

stipulated sale within a stipulated time frame; on

failure of the plaintiff to respond to the notice seeking

execution of sale, the agreement was terminated. In

that context, this Court held:

“36. Since the plaintiff did not perform his part

of contract within the extended period in the

legal notice referred to supra, the agreement of

sale was terminated as per notice dated 28-3-

1985 and thus, there is termination of the

11

(2013) 15 SCC 27

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 28 of 39

agreement of sale between the plaintiff and

defendants 1-4 w.e.f. 10-4-1985

37. As could be seen from the prayers sought

for in the original suit, the plaintiff has not

sought for declaratory relief to declare the

termination of agreement of sale as bad in law.

In the absence of such prayer by the plaintiff

the original suit filed by him before the trial

court for grant of decree for specific

performance in respect of the suit scheduled

property on the basis of agreement of sale and

consequential relief of decree for permanent

injunction is not maintainable in law.

38. Therefore, we have to hold that the relief

sought for by the plaintiff for the grant of decree

for specific performance of execution of sale

deed in respect of the suit scheduled property

in his favor on the basis of non-existing

agreement of sale is wholly unsustainable in

law.”

29. In A. Kanthamani

12 (supra), the decision in

I.S. Sikandar (supra) was considered, and it was held:

“30.3. Third, it is a well settled principle of law

that the plea regarding the maintainability of

suit is required to be raised in the first instance

in the pleading (written statement) then only

such plea can be adjudicated by the trial court

on its merits as a preliminary issue under

Order 14 Rule 2 CPC. Once the finding is

rendered on the plea, the same can be

examined by the first or/ and second appellate

court. It is only in appropriate cases, where the

court prima facie finds by mere perusal of

plaint allegations that the suit is barred by any

express provision of law or is not legally

maintainable due to any legal provision; a

judicial notice can be taken to avoid abuse of

12

See: Footnote 5

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 29 of 39

judicial process in prosecuting such suit. Such

is, however, not the case here.

30.4. Fourth, the decision relied on by the

learned counsel for the appellant in I.S.

Sikandar turns on the facts involved therein

and is thus distinguishable.”

30. In R. Kandasamy (since dead) and others

v. T.R.K. Sarawathy and another

13, this Court

considered both I.S. Sikandar (supra) and A.

Kanthamani (supra), and clarified the law by observing

as under:

“47. However, we clarify that any failure or

omission on the part of the trial court to frame

an issue on maintainability of a suit touching

jurisdictional fact by itself cannot trim the

powers of the higher court to examine whether

the jurisdictional fact did exist for grant of relief

as claimed, provided no new facts were

required to be pleaded and no new evidence

led.”

31. From the aforesaid decisions what is clear is

that though a plea regarding maintainability of the

suit, even if not raised in written statement, may be

raised in appeal, particularly when no new facts or

evidence is required to address the same, the issue

13

(2025) 3 SCC 513

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 30 of 39

whether a declaratory relief is essential or not would

have to be addressed on the facts of each case.

32. In our view, a declaratory relief would be

required where a doubt or a cloud is there on the right

of the plaintiff and grant of relief to the plaintiff is

dependent on removal of that doubt or cloud.

However, whether there is a doubt or cloud on the

right of the plaintiff to seek consequential relief, the

same is to be determined on the facts of each case.

For example, a contract may give right to the parties,

or any one of the parties, to terminate the contract on

existence of certain conditions. In terms thereof, the

contract is terminated, a doubt over subsistence of the

contract is created and, therefore, without seeking a

declaration that termination is bad in law, a decree for

specific performance may not be available. However,

where there is no such right conferred on any party to

terminate the contract, or the right so conferred is

waived, yet the contract is terminated unilaterally,

such termination may be taken as a breach of contract

by repudiation and the party aggrieved may, by

treating the contract as subsisting, sue for specific

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 31 of 39

performance without seeking a declaratory relief qua

validity of such termination.

Plaintiff-appellant was not required to seek a

declaration

33. At the cost of repetition, we may observe that

in the case on hand, by accepting Rs.1,95,000 after

expiry of six months, D-1 and D-2, firstly, waived their

right, as available to them under the contract, to

forfeit the advance consideration/ earnest money,

secondly, by such acceptance and endorsement on

the back of the agreement they treated the contract as

subsisting and, thirdly, by transferring part of the

subject matter of the agreement in favour of D-3, even

before serving a forfeiture notice, they committed a

breach of the contract. In such circumstances, in our

view, the plaintiff had an option to treat the contract

as subsisting and sue for specific performance more

so when termination was a void act, no longer

permissible under the varied contract. In our view,

therefore, the suit for specific performance was

maintainable even without seeking a declaration that

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 32 of 39

termination of the contract was invalid in law. Issue

B is answered accordingly.

Issue C

34. Prior to comprehensive amendments brought

by Act 18 of 2018 to Sections 10, 14 and 20 of the

Specific Relief Act, 1963 (for short the 1963 Act), with

effect from 01.10.2018, Section 10 of the 1963 Act

specified cases in which specific performance of

contract is enforceable. In Katta Sujatha Reddy v.

Siddamsetty Infra Projects (P) Ltd.

14, this Court

held that 2018 Amendment to the 1963 Act is

prospective and cannot apply to those transactions

that took place prior to its coming into force. No doubt,

this decision was reviewed and recalled in

Siddamsetty Infra Projects (P) Ltd. v. Katta

Sujatha Reddy

15 but in the review order/ judgment

this Court did not specifically hold that the amended

provisions would govern suits instituted prior to the

2018 Amendment (see paragraph 32 of the review

judgment). Rather, in review, this Court proceeded to

14

(2023) 1 SCC 355

15

2024 INSC 861 = 2024 SCC OnLine SC 3214, See paragraph 32

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 33 of 39

decide the matter by assuming that the grant of

specific performance continued to be discretionary to

a suit instituted before the date of the amendment.

Besides above, the judgment impugned in this appeal

was passed on 02.02.2018 i.e., before the amendment

came into effect. Therefore, we proceed to address

issue C based on law that existed on the date when

the impugned judgment was passed.

35. Section 10 of the 1963 Act as it existed prior

to 2018 Amendment provided that the specific

performance of any contract may, in the discretion of

the court, be enforced, inter alia, when there exists no

standard for ascertaining actual damage caused by

the non-performance of the act agreed to be done.

Explanation to Section 10 clarified that unless the

contrary is proved, the court shall, inter alia, presume

that the breach of a contract to transfer immovable

property cannot be adequately relieved by

compensation in money. Section 14 of 1963 Act as it

stood prior to the amendment specified following

contracts which cannot be specifically enforced,

namely, (a) a contract for the non-performance of

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 34 of 39

which compensation in money is an adequate relief;

(b) a contract which runs into such minute or

numerous details or which is so dependent on the

personal qualifications or volition of the parties, or

otherwise from its nature is such, that the court

cannot enforce specific performance of its material

terms; (c) a contract which in its nature determinable;

and (d) a contract the performance of which involves

the performance of a continuous duty which the court

cannot supervise.

36. In the case on hand, the contract does not fall

in category (a) (supra) in view of Explanation to

Section 10 of the 1963 Act as it stood prior to the 2018

Amendment. It also does not fall in category (b)

(supra), (c) (supra) and (d) (supra). While deciding

issue B we have already seen that there was no clause

in the contract conferring a right to terminate the

agreement and insofar as the right of forfeiture was

concerned that stood waived. Consequently, there was

no bar of Section 14 operating against specific

enforcement of the contract. As far as personal bar to

the relief of specific performance is concerned, while

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 35 of 39

deciding issue A, we have already held that the finding

of the first appellate court that the plaintiff was ready

and willing to perform its part under the contract was

not liable to be interfered with by the High Court in

exercise of its power under Section 100 of CPC.

Therefore, what now remains to be considered is

whether the Court should decline the discretionary

relief of specific performance in exercise of its

discretionary power vested in it by Section 20

16 of the

1963 Act, as it stood prior to the 2018 Amendment.

37. In the case on hand, the High Court declined

discretionary relief of specific performance on two

counts: (a) time was the essence of contract, no steps

16

Section 20. Discretion as to decreeing specific performance. – (1) The jurisdiction to decree specific

performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so;

but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable

of correction by a court of appeal.

(2). The following are cases in which the court may properly exercise discretion not to decree specific

performance:-

(a) where the terms of the contract or the conduct of the parties at the time of entering into the contract

or other circumstances under which the contract was entered into are such that the contract, though not

voidable, gives the plaintiff an unfair advantage over the defendant; or

(b) where the performance of the contract would involve some hardship on the defendant which he did

not foresee, whereas its non-performance would involve no such hardship on the plaintiff; or

(c) where the defendant entered into the contract under the circumstances which though not rendering

the contract voidable, makes it inequitable to enforce specific performance.

Explanation 1. - Mere inadequacy of consideration or the mere fact that the contract is onerous to the defendant

or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of clause

(a) or hardship within the meaning of clause (b).

Explanation 2. - The question whether the performance of a contract would involve hardship on the defendant

within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff

subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract.

(3) The court may properly exercise discretion to decree specific performance in any case where the plaintiff has

done substantial acts or suffered losses in consequence of a contract capable of specific performance.

(4) The court shall not refuse to any party specific performance of a contract merely on the ground that the

contract is not enforceable at the instance of the party.

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 36 of 39

were taken by the plaintiff to get the sale deed

executed within six months; and (b) the plaintiff could

not prove payment of additional Rs.1,95,000 and had

set up a false plea of being in possession of the suit

property therefore, it had not approached the court

with clean hands which disentitled the plaintiff/

appellant for a decree of specific performance.

38. In our view, both grounds to decline the relief

of specific performance are not sustainable. Because,

while deciding issue A (supra), we have already held

that High Court erred in law by setting aside finding

of fact returned by the first appellate court that D-1

and D-2 were paid additional Rs.1,95,000, which they

acknowledged by making an endorsement on the back

of the agreement. In our view, acceptance of additional

money not only signified waiver of the right to forfeit

advance money /consideration but also acknowledged

subsistence of the agreement. Hence, High Court’s

conclusion that plaintiff had set up a false case of

additional payment is unsustainable and, therefore,

cannot be a ground to decline discretionary relief of

specific performance. Insofar as plaintiff’s case of him

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 37 of 39

being in possession of suit schedule property is

concerned, the same was not accepted on the ground

that there was no recital in the agreement regarding

handing over of possession. But that by itself would

not be sufficient to hold that the plaintiff made a false

claim of being in possession. A claim, if not proved,

does not make it false. A statement is false when its

maker knows the same is incorrect

17. Otherwise also,

the plaintiff stands to gain nothing substantial by

claiming possession over the suit schedule property in

a suit for specific performance in as much as a decree

of specific performance would ultimately entitle him to

possession

18.

39. In the instant case, there is evidence on record

that the Tehsildar had reported regarding possession

of the plaintiff over the suit property though that

report was subject to final adjudication in the suit. In

such circumstances, merely because plaintiff’s claim

that property was in his possession was not accepted,

the relief of specific performance cannot be declined,

17

Ravinder Singh v. Sukhbir Singh and Others, (2013) 9 SCC 245, see paragraphs 18 and 20

18

Babu Lal v. Hazari Lal Kishori Lal, (1982) 1 SCC 525

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 38 of 39

particularly, when the plaintiff had already paid over

90% of the agreed consideration and paid additional

amount also as demanded by D-1 and D-2. Further,

D-3 was a related party of D-1 and D-2 and, therefore,

not a bona fide purchaser. We are, therefore, of the

firm view that this was not a fit case where

discretionary relief of specific performance should

have been denied.

40. For the aforesaid reasons, we are of the

considered view that the High Court erred in law by

interfering with the decree of specific performance

passed by the first appellate court. These appeals are

therefore allowed. The judgment and decree(s) of the

High Court is/are set aside and that of the first

appellate court is/are restored. As it is not clear from

the record before us as to whether the plaintiff has

deposited the balance amount of Rs.10,000 for

execution of the sale deed, in terms of Order XX Rule

12 A of CPC, we deem it appropriate to direct that the

plaintiff-appellant shall deposit the balance amount,

if not deposited already, in the execution court, within

a period of one month from today.

Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 39 of 39

41. Parties to bear their own costs.

42. Pending applications, if any, shall stand

disposed of.

................................................J.

(J.B. PARDIWALA)

................................................J.

(MANOJ MISRA)

New Delhi;

October 29, 2025