Buyer who paid 75% of sale price gets specific performance under Section 16(c) of Specific Relief Act

The SC allowed review petitions, recalling its earlier judgment and restoring the HC decision. The petitioner successfully established readiness and willingness to perform the contract under Section 16(c) of the Specific Relief Act by paying approximately 75% of the sale consideration. The court held that specific performance was appropriate as monetary compensation would be inadequate for breach of immovable property transfer contract. The doctrine of lis pendens under Section 52 of the Transfer of Property Act applied to bar third-party transfers during pendency of litigation, commencing from institution date regardless of registry defects. The suit property transfer to third parties was subject to final litigation outcome.

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Issues Involved:

1. Whether the suit instituted by the petitioner was barred by limitation.
2. Whether the suit for specific performance must be decreed.
3. Interpretation of the contractual terms regarding time being of essence.
4. Application of the doctrine of lis pendens.

Issue-wise Detailed Analysis:

1. Limitation:

The Supreme Court initially held that the suit was barred by limitation, as the suit had to be instituted within three years from the time fixed for completing the performance, which was interpreted as three months from the sale agreements. The Court relied on Clause 3 of the agreements, which stipulated a three-month period for the completion of obligations, and concluded that the suit should have been filed by June 2000. However, upon review, it was found that the interpretation of Clause 3 was erroneous. The clause provided consequences for both parties' failures, not just the purchaser's, and the agreements did not fix a date for performance. Thus, the limitation period should be calculated from when the petitioner had notice of the refusal of performance, which was on 14 April 2000. Therefore, the suit filed on 30 July 2002 was within the limitation period.

2. Specific Performance:

The initial judgment concluded that the petitioner was not entitled to specific performance due to a lack of readiness and willingness to perform the contract, as the balance consideration was not paid within the stipulated three months. This was based on the erroneous interpretation that time was of the essence. The review found that the petitioner had paid a substantial portion of the consideration, indicating readiness and willingness. The respondents had also failed to fulfill their obligations to provide necessary documents, which was not challenged. The Court concluded that the petitioner was ready and willing to perform the contract and that specific performance should be decreed.

3. Interpretation of Contractual Terms:

The Court initially interpreted Clauses 3, 21, and 23 to conclude that time was of the essence, particularly relying on a previous agreement from 1994 that did not involve the petitioner. This interpretation was found to be an error apparent on the face of the record. The agreements did not fix a specific time for performance, and the consequences for non-performance applied to both parties. The review clarified that the agreements did not make time of the essence for the completion of the contract, and the petitioner's actions demonstrated readiness and willingness to perform.

4. Doctrine of Lis Pendens:

The respondents argued that the doctrine of lis pendens did not apply because the review petition was in a defective state when the suit property was alienated. However, the Court clarified that lis pendens applies from the date of institution of the proceedings, which in this case was when the review petition was filed within the limitation period. Thus, any transfer made during the pendency of the review petition is subject to the final outcome of the litigation.

Relief:

The review resulted in recalling the prior judgment of 25 August 2022, restoring the High Court's judgment dated 23 April 2021, which decreed specific performance to the extent proportionate to the consideration paid by the petitioner. The review petition was allowed, and the pending applications were disposed of accordingly.

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