Non-Adherence to Payment Schedule Bars Buyer from Seeking Specific Performance of Sale Agreement: Supreme Court
Case Title: Alagammal and Ors. v. Ganesan and Anr.
Case No: Civil Appeal No. 8185 of 2009
Decided on: 10th January, 2024
CORAM: THE HON’BLE MR. JUSTICE VIKRAM NATH AND HON’BLE MR. JUSTICE AHSANUDDIN AMANULLAH
Facts of the Case
The first, second, and third appellants (“Appellants”) entered into a registered Agreement of Sale with the respondents on November 22, 1990, for the sale of a property at a consideration of Rs. 21,000, with an advance payment of Rs. 3,000. The agreement set a six-month timeframe for completing the transaction. Meanwhile, the appellants executed a Sale Deed for the same property with appellant no.7 on November 5, 1997, for a consideration of Rs. 22,000.
On November 18, 1997, the respondents sent a Notice to the appellants, demanding the execution of the Agreement. Subsequently, the respondents filed an original suit in the Munsiff Court against the appellants, seeking specific performance of the Agreement, damages, and the recovery of money with interest.
The Principal District Munsiff Judge dismissed the suit. The respondents, dissatisfied with this decision, appealed to the First Appellate Court, which ruled in their favor. The High Court upheld the decision in the Impugned Judgment.
This Civil Appeal is filed by the Appellants against the High Court’s impugned order and judgment in the Second Appeal.
Issue
The central issue under consideration pertains to whether the Agreement dated November 22, 1990, clearly specifies a definite period within which the respondents are obligated to make full payment, as outlined in the recitals of the sale agreement executed by appellant no.1 in favor of the respondents.
Court’s analysis and decision
In a recent ruling, the Supreme Court emphasized that adherence to the specified time frame for payment in a contract is crucial for executing an ‘agreement to sale.’ The Court overturned the decisions of both the High Court and the First Appellate Court. Justices Vikram Nath and Ahsanuddin Amanullah noted that the buyer is obligated to strictly comply with the stipulated time for payment; failure to do so bars the buyer from seeking specific performance of the sale deed.
The Court pointed out that, according to the contract, the buyer had a six-month period to pay the entire balance. However, the respondents failed to demonstrate that they even offered to fulfill this obligation by paying the remaining amount within the specified six-month period. Consequently, the Court concluded that the respondents did not meet their obligation under the Agreement within the designated time frame.
The Court ultimately overturned the challenged judgment rendered by both the High Court and the First Appellate Court, reinstating the order and judgment issued by the Trial Court. Accordingly, the appeals are granted.
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Written by- Afshan Ahmad