In property disputes involving agreements to sell, litigants often assume that filing a suit within the prescribed limitation period is sufficient to secure a decree for specific performance. However, the Supreme Court has repeatedly emphasised that specific performance is not a matter of right but an equitable remedy governed by principles of fairness, diligence, and good faith.
In Mohammed Khaleel (D) through LRs & Ors. v. Jayamma (2026 INSC 651), the Supreme Court revisited one of the most important requirements under the Specific Relief Act, 1963, the obligation of a plaintiff to establish continuous readiness and willingness to perform his part of the contract. The Court clarified that financial capacity and willingness must be demonstrated from the time of execution of the agreement and not merely through evidence generated years later. The ruling also reiterates that even where a suit is filed within the limitation period, unexplained delay may undermine a claim for equitable relief.
The judgment serves as a significant reminder that courts examine not only whether a purchaser ultimately possessed the funds to complete the transaction but also whether such readiness existed throughout the relevant period and whether the purchaser acted diligently after the breach of contract.
The Dispute That Reached the Supreme Court
The dispute arose from an agreement to sell executed on 20 December 1990. Under the agreement, the defendant agreed to sell a vacant site for a total consideration of ₹3 lakh. The purchaser paid ₹25,000 as earnest money, while the remaining ₹2.75 lakh was to be paid at the time of execution and registration of the sale deed. The parties agreed that the transaction would be completed within four months.
The purchaser claimed that the seller had also agreed to facilitate the formation of an approach road to the property and had handed over various title documents. According to him, the transaction could not be completed because the road was not formed and the necessary permissions under the Urban Land (Ceiling and Regulation) Act, 1976 had not been obtained.
The seller, however, maintained that there already existed an approach road and denied any obligation to create a new one. She further contended that the purchaser had failed to complete the transaction within the agreed period and had not taken the necessary steps for obtaining statutory clearance.
Following an exchange of legal notices, the seller rescinded the agreement in April 1991. Nevertheless, the purchaser waited until December 1993 to institute a suit seeking specific performance.
The Trial Court’s View
The Trial Court ruled in favour of the purchaser. It concluded that:
- Possession had been delivered to the purchaser.
- Time was not the essence of the contract.
- The purchaser was ready and willing to perform his obligations.
- The seller had unjustifiably rescinded the agreement.
Consequently, the suit for specific performance was decreed.
Why the High Court Reversed the Decree
The High Court took a different view. It held that the purchaser had failed to establish readiness and willingness as required under Section 16(c) of the Specific Relief Act. The Court found that he had not taken the necessary steps for obtaining statutory permission and had also delayed filing the suit by nearly two years and nine months after the seller’s refusal. Although the suit was technically within limitation, the High Court considered the delay significant while evaluating entitlement to an equitable remedy.
The purchaser challenged this decision before the Supreme Court.
Issue
- Can a plaintiff prove readiness and willingness by producing evidence of financial capacity years after the agreement and years after filing the suit?
- Does filing a suit within the limitation automatically establish diligence and entitlement to specific performance?
Understanding the Twin Requirements: Readiness and Willingness
The Court reiterated that Section 16(c), as it existed before the 2018 amendment, imposed a mandatory obligation on a plaintiff seeking specific performance to both plead and prove continuous readiness and willingness to perform contractual obligations.
The Court explained that the two expressions have distinct meanings.
Readiness
Readiness primarily refers to financial capability. A purchaser must demonstrate that he possessed or could arrange the funds required for completing the transaction.
Willingness
Willingness concerns conduct. Courts assess whether the purchaser consistently displayed an intention to complete the transaction and took reasonable steps towards performance.
The Court emphasised that these requirements are cumulative. A plaintiff must establish both financial readiness and genuine willingness throughout the relevant period.
The Fatal Weakness in the Purchaser’s Case
The purchaser attempted to prove financial readiness through four Fixed Deposit Receipts worth ₹70,000 each. According to him, these deposits demonstrated the availability of funds exceeding the balance consideration amount.
At first glance, the argument appeared persuasive. However, the Supreme Court identified a critical flaw. The FDRs were created in 1999, 1999, 2001 and 2001, many years after the agreement of 1990 and several years after the institution of the suit in 1993. Consequently, they did not establish the purchaser’s financial position during the relevant period.
The Court held that readiness must be proved with reference to the period when performance was required, not by relying on financial documents generated much later. The existence of funds years afterwards could not cure the absence of evidence showing financial capacity when the contract ought to have been performed.
The Timeline Principle Clarified
Perhaps the most important contribution of this judgment lies in its clarification regarding the timeline for proving readiness. The Court reaffirmed that readiness and willingness must exist continuously from the date of execution of the agreement until the final adjudication of the dispute.
A plaintiff cannot simply show that he acquired sufficient funds later in time and then claim compliance with Section 16(c). What matters is whether he had the financial ability and genuine intention to perform when the obligation arose and whether that readiness continued thereafter.
This principle prevents parties from retrospectively manufacturing evidence of readiness after years of inactivity.
Failure to Obtain Statutory Permission
The Court also examined the issue of permission under the Urban Land Ceiling legislation. The purchaser argued that responsibility for obtaining permission primarily rested with the seller. He maintained that he was willing to cooperate whenever required.
The Supreme Court was unconvinced. The record revealed that both parties were required to participate in obtaining the necessary clearance. Evidence showed that the purchaser had failed to furnish the required affidavits and forms. Instead of actively pursuing the process, he remained passive and waited for the seller to act.
According to the Court, such conduct was inconsistent with the concept of continuous readiness and willingness. A party genuinely interested in enforcing an agreement must actively facilitate performance rather than merely blame the other side.
Delay: More Than a Limitation Question
The purchaser’s strongest argument was that the suit had been filed within the prescribed limitation period. Legally, this was correct.
Yet the Supreme Court explained why the argument was insufficient. Specific performance is an equitable remedy. Therefore, courts examine not only limitation but also diligence, fairness, and conduct. A plaintiff may technically remain within the limitation and still fail to satisfy equitable standards.
The Court noted that the seller had clearly refused performance in April 1991. Despite this, the purchaser waited until December 1993 to institute proceedings.
This delay of approximately two years and nine months remained unexplained. The Court viewed such inactivity as inconsistent with the conduct expected from a person genuinely eager to complete the transaction.
Reliance on Earlier Supreme Court Precedents
The judgment draws support from several landmark decisions.
The Court reaffirmed the principles laid down in:
- N.P. Thirugnanam v. Dr. R. Jagan Mohan Rao
- His Holiness Acharya Swami Ganesh Dassji v. Sita Ram Thapar
- Umabai v. Nilkanth Dhondiba Chavan
- Man Kaur v. Hartar Singh Sangha
- K.S. Vidyanadam v. Vairavan
- Saradamani Kandappan v. S. Rajalakshmi
- Rajesh Kumar v. Anand Kumar
Collectively, these decisions establish that readiness and willingness are continuing obligations and that delay, though within limitation, may still influence the court’s exercise of discretion.
Why the Plaintiff Ultimately Lost
The purchaser’s case failed for three interconnected reasons. He failed to establish financial readiness during the relevant period. The FDRs relied upon were created years after the suit had been filed.
He failed to demonstrate proactive participation in obtaining statutory permission. His conduct reflected passivity rather than eagerness to complete the transaction. He waited nearly three years after the refusal to seek judicial intervention. Although the suit was within the limitations, the delay weakened his claim for an equitable remedy.
Taken together, these circumstances convinced the Court that continuous readiness and willingness had not been established.
Practical Lessons for Property Purchasers
This judgment offers important lessons.
A purchaser seeking specific performance should:
- Maintain documentary proof of financial capacity from the outset.
- Preserve bank statements, loan sanctions, deposits, and other evidence.
- Participate actively in obtaining permissions and clearances.
- Respond promptly to breaches.
- Avoid waiting until the end of the limitation period to file suit.
Most importantly, readiness must be demonstrated through contemporaneous evidence rather than later-created documents.
Conclusion
The Supreme Court’s decision in Mohammed Khaleel v. Jayamma reinforces a foundational principle of specific performance jurisprudence: readiness and willingness are not formalities but substantive requirements that must be established continuously throughout the life of the contract. A plaintiff cannot rely upon financial documents created years later or seek refuge behind the mere fact that the suit was filed within the limitation. Equity favours those who act diligently, maintain financial preparedness, and consistently demonstrate an intention to perform their contractual obligations.
By clarifying that readiness must be proved from the time performance became due, and not retrospectively through later evidence, the Court has provided valuable guidance for future specific performance litigation. The ruling is likely to influence how courts evaluate financial capacity, delay, and conduct in contractual disputes for years to come.