2026 INSC 776 | 31 July 2026
What the case was about
This judgment deals with a dispute over a 2004 agreement to sell land and a building in Udhagamandalam, Nilgiris. The buyers paid an advance, and the seller executed a general power of attorney in favour of the buyer’s husband. When the transaction collapsed, the buyers sued to compel completion of the sale—a remedy known as “specific performance.” The Trial Court refused to force the sale and instead decreed only a refund of the advance with interest, together with a charge on the property. The Madras High Court reversed that outcome and decreed specific performance. The seller appealed to the Supreme Court, which restored the Trial Court’s refund decree. The decision reaffirms that specific performance is an equitable, discretionary remedy and not an automatic right under the Specific Relief Act, 1963.
The key facts
On 1 April 2004, V.N.A.S. Chandran entered into an Agreement to Sell with Mrs. S. Venilla for ₹2.25 crores and executed a general power of attorney in favour of her husband (para 2). Completion of the sale was contingent on setting aside an ex parte preliminary decree in a pending partition suit. That decree was set aside on 6 April 2005 (para 9). On 4 May 2005, the seller demanded the balance sale consideration and, the same day, revoked the power of attorney, alleging that the buyer’s husband had misused it by entering into a sub-agreement with a third party (para 17). The seller then terminated the agreement, prompting the buyers to file a suit for specific performance (OS No. 11 of 2006) (para 22).
The buyers claimed they had paid ₹85 lakh as advance, while the seller maintained he received only ₹60 lakh (para 5). Their ability to pay was questioned after two cheques they issued—dated 10 April 2004 for ₹25 lakh and 24 May 2004 for ₹5 lakh—were dishonoured for insufficient funds (para 39). Meanwhile, even as the civil suit pressed for specific performance, the buyer’s husband lodged a criminal complaint asking the police to recover the advance from the seller (para 45). The buyers also adopted contradictory positions in related litigation and withheld material facts from the court (paras 48, 51).
The questions before the Court
The Supreme Court had to decide four main issues:
- Whether the suit for specific performance was maintainable without a prior declaration that the seller’s unilateral termination of the agreement was invalid.
- Whether the buyers had proved continuous “readiness and willingness” to perform their side of the contract as required under Section 16(c) of the Specific Relief Act, 1963.
- Whether the buyers approached the court with clean hands, given their criminal complaint and contradictory positions in related proceedings.
- Whether the lapse of more than two decades and the seller’s advanced age made it inequitable to compel the sale.
What the Court decided and why
The Court allowed the seller’s appeals, set aside the High Court’s decree of specific performance, and restored the Trial Court’s judgment granting the buyers a refund of the advance with interest and a charge on the suit property (para 53). The buyers were permitted to withdraw the deposited amount of ₹1,40,00,000 along with accrued interest, with no order as to costs.
Maintainability: The Court held the suit was maintainable without a separate declaratory decree. Because the Agreement to Sell did not confer any contractual right of unilateral termination on the seller, his purported termination amounted to repudiation. The buyers were entitled to treat the contract as subsisting and sue directly for specific performance without first seeking a declaration as to validity (para 37).
Readiness and willingness: Despite the suit being maintainable, the buyers failed to prove continuous readiness and willingness. The Court pointed to the two dishonoured cheques as evidence that they lacked funds at critical moments (para 39). It also noted that they had not established arranged funds at the time of filing the suit. Under Section 16(c), a plaintiff must prove continuous readiness and willingness from the date of the agreement until the date of the decree, and must show the consideration was available (para 41).
Clean hands: The Court found the buyers’ conduct disentitled them to equitable relief. The buyer’s husband filed a criminal complaint explicitly requesting that the police recover the advance from the seller while the civil suit claimed specific performance (para 45). The Court rejected the argument that this was an excusable “counterblast,” observing that retaliatory criminal proceedings are generally censured. The buyers also adopted contradictory positions in related litigation (para 48). Moreover, they withheld material facts from the court, such as failing to mention a memorandum of understanding in their pleadings (para 51). The Court held that a plaintiff seeking equity must come with clean hands, and even a slight doubt about bona fides can warrant denial of the relief.
Hardship and delay: Finally, the Court considered that over two decades had passed since the agreement was concluded and that the seller was now of highly advanced age. Compelling the transfer of immovable property under these circumstances would not be equitable (para 52).
Why it matters
The judgment reiterates four enduring principles of Indian contract law. First, specific performance is a discretionary, equitable remedy under Section 20 of the Specific Relief Act; the mere existence of a valid agreement does not guarantee it (para 41). Second, “readiness and willingness” under Section 16(c) means continuous readiness from the agreement’s execution through the date of the decree; sporadic or belated evidence of funds is insufficient (paras 39, 41). Third, the “clean hands” doctrine is strictly enforced: plaintiffs who seek equity cannot simultaneously pursue contradictory remedies or withhold material facts (paras 45, 51). Fourth, even where a contract otherwise survives, a substantial lapse of time and resulting hardship to the defendant are valid grounds to deny specific performance (para 52). For litigants and practitioners, the decision underscores that conduct throughout the transaction—and not merely the text of the agreement—determines whether a court will compel a sale.