Merely establishing the existence of a valid agreement to sell does not automatically entitle a plaintiff to a decree for specific performance. Courts are required to examine the plaintiff’s conduct, readiness and willingness to perform contractual obligations, surrounding circumstances, and whether granting such relief would be equitable.
In V.N.A.S. Chandran v. S. Venila & Others (2026 INSC 776), the Supreme Court set aside the Madras High Court’s decree granting specific performance and restored the trial court’s order directing only refund of the advance amount with interest. The judgment is an important exposition of the law relating to Section 16(c) and the unamended Section 20 of the Specific Relief Act, 1963, reiterating that equitable relief is available only to litigants who approach the court with clean hands and continuously demonstrate readiness and willingness to perform the contract.
Background of the Dispute
The dispute arose from an agreement to sell executed on 1 April 2004, whereby the defendant agreed to sell an immovable property situated at Ooty for a consideration of ₹2.25 crore.
According to the purchasers:
- An advance amount of ₹85 lakh had been paid.
- The vendor wrongfully terminated the agreement.
- They were always ready and willing to complete the transaction.
- They had incurred substantial expenses for vacating tenants and arranging finances.
The vendor, however, disputed several of these assertions. He claimed:
- Only ₹60 lakh had actually been received.
- The purchasers failed to pay the balance consideration within the stipulated period.
- They lacked financial capacity throughout the transaction.
- They misused the power of attorney granted to them by creating third-party interests over the property.
The trial court found that although the purchasers had paid ₹85 lakh, they were not entitled to the equitable relief of specific performance because their conduct disentitled them from obtaining such discretionary relief. Instead, the court directed refund of the advance amount with interest and created a statutory charge over the property.
The High Court reversed this finding and granted specific performance. The matter ultimately reached the Supreme Court.
Issues Before the Supreme Court
The principal issues considered by the Court were:
- Whether the plaintiffs had continuously remained ready and willing to perform the contract.
- Whether their conduct justified grant of an equitable decree.
- Whether a separate declaration challenging termination of the agreement was necessary before seeking specific performance.
- Whether the High Court was justified in reversing the trial court’s exercise of discretion.
Specific Performance Is Not Automatic
The Supreme Court reiterated a settled proposition of law that specific performance is not granted merely because a contract is valid and enforceable.
The Court observed that under the unamended Section 20 of the Specific Relief Act, the jurisdiction to grant specific performance was entirely discretionary.
The discretion, however, is:
- judicial,
- based upon settled legal principles,
- guided by equity,
- and subject to appellate scrutiny.
Therefore, even where breach of contract is established, the Court may refuse specific performance if equitable considerations so require.
Continuous Readiness and Willingness Is Mandatory
One of the most important aspects of the judgment concerns the requirement of continuous readiness and willingness under Section 16(c) of the Specific Relief Act.
The Court observed that the plaintiff must establish:
- financial capacity,
- genuine intention,
- continuous preparedness,
- willingness to fulfil contractual obligations,
from the date of the agreement until the decree is passed.
Readiness and willingness cannot be proved by producing funds only during appellate proceedings. The Supreme Court criticised the High Court for relying upon a demand draft produced several years later during the hearing of the appeal.
Instead, the Court examined the plaintiffs’ conduct throughout the transaction.
It noticed that:
- two cheques issued towards consideration had bounced,
- the plaintiffs failed to establish continuous availability of funds,
- the alleged memorandum for sale of another property did not demonstrate actual financial capability,
- the sale of that property occurred much later.
Consequently, the Court held that the plaintiffs failed to establish the continuous readiness and willingness required by law.
Financial Capacity Must Be Real, Not Theoretical
The judgment clarifies that merely expressing willingness is insufficient. Courts expect evidence showing that the purchaser actually possessed the financial means necessary to complete the sale.
The Court found several circumstances inconsistent with financial readiness:
- dishonour of substantial cheques,
- absence of available funds,
- delayed arrangements for raising money,
- lack of documentary evidence showing availability of consideration at the relevant time.
Therefore, readiness cannot be inferred merely because funds become available years later. The plaintiff must prove capacity throughout the contractual period.
Conduct of the Plaintiff Determines Equitable Relief
The Supreme Court devoted considerable attention to the conduct of the purchasers. Equity requires that a litigant seeking discretionary relief must approach the court with clean hands.
The Court noted several inconsistencies:
Criminal Proceedings
The purchasers’ representative had filed a criminal complaint seeking recovery of the advance money. At the same time, the civil suit sought specific performance of the same agreement.
The Court observed that one cannot simultaneously:
- treat the agreement as subsisting,
- and seek recovery as though the agreement had failed.
Such inconsistent positions weakened the plaintiffs’ claim for equitable relief.
Contradictory Pleadings
The Court further noticed that in another suit involving a third party:
- the purchasers claimed rights under the agreement had been assigned,
- whereas in the specific performance suit they argued that no assignment had taken place.
These mutually destructive stands seriously affected their credibility. The Supreme Court held that equitable relief cannot be granted where litigants adopt contradictory positions before different courts.
Creating Third-Party Rights
Another important factor considered by the Court was the execution of a subsequent agreement in favour of another purchaser. The plaintiffs had entered into another transaction involving the same property before acquiring title.
The Court observed that this conduct itself raised serious questions regarding bona fides. Whether viewed as:
- misuse of power of attorney,
- or an assignment of contractual rights,
the transaction demonstrated conduct inconsistent with equitable principles.
Clean Hands Doctrine Reaffirmed
The Court reiterated a long-standing equitable maxim:
He who seeks equity must do equity.
Specific performance cannot be claimed by a litigant whose conduct is unfair, inconsistent or lacking in bona fides.
The Court observed that:
- suppression of material facts,
- contradictory litigation strategies,
- withholding important documents,
- inconsistent representations,
may independently justify refusal of specific performance.
This principle forms the heart of equitable jurisdiction.
No Automatic Right Despite Valid Contract
An important contribution of the judgment is its clarification that even where:
- the agreement is genuine,
- consideration is partly paid,
- breach by the vendor is established,
the plaintiff must still satisfy the equitable requirements governing specific performance.
The Court clearly distinguished:
- contractual rights,
- equitable relief.
The existence of one does not automatically result in the grant of the other.
Declaratory Relief Was Not Necessary
The defendant argued that since the agreement had been terminated, the purchasers ought first to have sought a declaration that such termination was illegal before claiming specific performance. The Supreme Court rejected this contention.
Relying upon its recent decision in Annamalai v. Vasanthi, the Court held that where unilateral termination itself amounts to repudiation of the contract and the agreement confers no contractual right of unilateral cancellation, the purchaser may simply treat the contract as subsisting and directly sue for specific performance without seeking an additional declaration.
Delay and Passage of Time
The Court also considered the extraordinary lapse of time. Nearly two decades had passed since execution of the agreement.
During this period:
- the vendor had become very old,
- one of the purchasers had died,
- circumstances had substantially changed.
The Court held that compelling transfer of immovable property after such prolonged delay would itself be inequitable. Passage of time remains an important consideration while exercising discretionary jurisdiction under the Specific Relief Act.
Earlier Supreme Court Decisions Reaffirmed
The judgment synthesises several landmark authorities on specific performance.
N.P. Thirugnanam v. Dr. R. Jagan Mohan Rao (1995)
The plaintiff must continuously remain ready and willing to perform the contract from execution until decree.
Kamal Kumar v. Premlata Joshi (2019)
Courts must examine:
- existence of a valid contract,
- readiness and willingness,
- actual performance,
- hardship,
- alternative relief.
Nanjappan v. Ramasamy & Anr. (2015)
Grant of specific performance depends upon:
- conduct of parties,
- surrounding circumstances,
- judicial discretion.
Major General Darshan Singh v. Brij Bhushan Chaudhary (2024)
Specific performance being equitable, the plaintiff’s conduct assumes central importance.
The present judgment consolidates these authorities into a coherent statement of law.
Practical Principles Emerging from the Judgment
The decision lays down several practical propositions:
1. Specific performance remains discretionary.
Courts are never bound to grant it merely because the agreement is valid.
2. Readiness and willingness must be continuous.
Financial capacity cannot be shown only at the final stage.
3. Plaintiff’s conduct matters.
Contradictory stands, suppression of facts and unfair conduct may defeat the suit.
4. Equity governs relief.
The Court balances fairness to both parties before granting specific performance.
5. Long delay is relevant.
Substantial passage of time may itself justify refusal of equitable relief.
6. Clean hands doctrine remains central.
A litigant seeking equity must demonstrate fairness throughout the transaction.
Conclusion
In V.N.A.S. Chandran v. S. Venila & Others (2026 INSC 776), the Supreme Court has reaffirmed one of the oldest principles of equity, that specific performance is an extraordinary equitable remedy, not an automatic consequence of every breached contract. Even where a valid agreement exists, the plaintiff must satisfy the court that they have continuously remained ready and willing to perform their obligations, approached the court with clean hands, and conducted themselves fairly throughout the transaction.
The Supreme Court’s decision to restore the trial court’s decree of refund, rather than compel transfer of the property, underscores that equitable relief depends not only on legal rights but also on fairness, bona fides, and justice. For litigants, lawyers, and courts alike, this judgment reinforces that in suits for specific performance, equity follows the vigilant, not those whose conduct undermines the very relief they seek.