1. Introduction: The Core Issue
Can a purchaser insist on specific performance after accepting refund of the advance consideration? In a decisive ruling, the Supreme Court in Sangita Sinha v. Bhawana Bhardwaj & Ors., 2025 INSC 450, answers this in the negative, placing decisive weight on the conduct of the plaintiff. The judgment sharpens the contours of equitable relief under the Specific Relief Act, 1963, particularly on readiness and willingness, the legal effect of accepting refund, and the indispensability of declaratory relief where the contract stands cancelled prior to suit.
2. Facts of the Case
The controversy stemmed from an unregistered Agreement to Sell dated 25 January 2008 for a total consideration of ₹25 lakhs. The buyer paid ₹2,51,000 in cash and issued three post-dated cheques towards part consideration. Soon thereafter, disputes emerged when the buyer claimed obstruction at the property. Legal notices were issued asserting readiness to perform, followed by a suit for specific performance before the Trial Court at Patna. The seller, however, repudiated the agreement, alleging fraud in execution. Crucially, by a letter dated 7 February 2008, the seller cancelled the agreement and refunded ₹2,11,000 through demand drafts, also returning two post-dated cheques. The buyer admittedly received these instruments and encashed the demand drafts in July 2008, after institution of the suit. Despite this, the Trial Court decreed specific performance, which was affirmed by the High Court, culminating in the present appeal before the Supreme Court.
3. Reasoning of the Supreme Court
The Court approached the matter through the lens of equitable relief, reiterating that prior to the 2018 amendment, specific performance is discretionary and conditioned upon strict compliance with statutory and equitable requirements. It drew a clear doctrinal distinction between “readiness” and “willingness.” While readiness pertains to financial capacity, willingness is inferred from conduct, both prior and subsequent to the suit. Continuous readiness and willingness from the date of agreement until the decree was reaffirmed as a sine qua non. On facts, the Court found the buyer’s conduct determinative. The encashment of demand drafts, without protest, was held to be wholly inconsistent with an intention to enforce the agreement. The Court observed that a party genuinely desirous of completion would not accept refund of consideration. This single act, in the Court’s view, destroyed the element of willingness.
The Court went further to hold that such encashment amounted to acceptance of the seller’s repudiation, thereby resulting in termination of the agreement itself. On the issue of maintainability, the Court held that once the agreement stood cancelled prior to institution of the suit, it was incumbent upon the plaintiff to seek a declaration that such cancellation was invalid. In the absence of such a prayer, the suit for specific performance was not maintainable. Additionally, the Court found suppression of material facts, as the plaintiff had failed to disclose the receipt and encashment of the refunded amount in the plaint. This, by itself, disentitled the plaintiff from equitable relief.
4. Citations and Precedents Considered
The judgment is anchored in established precedent. The Court relied on Kamal Kumar vs. Premlata Joshi and Ors., (2019) 3 SCC 704 and P. Daivasigamani vs. S. Sambandan, (2022) 14 SCC 793 to reiterate the structured inquiry governing specific performance. The doctrine of continuous readiness and willingness was reinforced through authorities including Gomathinayagam Pillai and Ors. vs. Palaniswami Nadar, (1967) 1 SCR 227, J.P.Builders and Another vs. A. Ramadas Rao and Another, (2011) 1 SCC 429, and C.S. Venkatesh vs. A.S.C. Murthy (Dead) by Legal Representatives and Ors., (2020) 3 SCC 280.
On maintainability and the necessity of declaratory relief, the Court engaged with I.S. Sikandar (Dead) By LRs. v. K. Subramani and Others, (2013) 15 SCC 27, A. Kanthamani Vs. Nasreen Ahmed, (2017) 4 SCC 654, and clarified the position through R. Kandasamy (Since Dead) & Ors. vs. T.R.K. Sarawathy & Anr. (Civil Appeal No. 3015 of 2013 decided on 21st November 2024)
The principle that suppression of material facts defeats equitable relief was reiterated from Citadel Fine Pharmaceuticals v. Ramaniyam Real Estates.
5. Ratio of the Judgment
The decision crystallises several key propositions. Acceptance and encashment of refunded consideration constitutes conduct inconsistent with willingness to perform and may amount to abandonment of the contract. Such conduct can also operate as acceptance of repudiation, resulting in termination of the agreement. Where an agreement stands cancelled prior to the institution of a suit, a prayer for declaration challenging such cancellation is essential; absent this, a suit for specific performance is not maintainable. Further, suppression of material facts disentitles a plaintiff from equitable relief.
6. Conclusion and Practical Guidance
This ruling is a clear signal that in suits for specific performance, conduct is often more decisive than pleadings. Courts will not overlook actions that indicate acquiescence or abandonment, even if formal assertions of readiness and willingness are made. For practitioners, the judgment underscores the necessity of precise and anticipatory drafting. Where there is any prior repudiation or cancellation, the plaint must contain a specific prayer for declaration setting aside such termination. Equally important is client conduct. Acceptance or encashment of refunded amounts, unless carefully qualified, can irreversibly undermine the case. Advising clients to maintain consistency between their legal stance and financial conduct becomes critical.
Finally, full and candid disclosure in pleadings is non-negotiable. In equity, suppression is not a tactical omission – it is a fatal defect. The decision ultimately reinforces a simple but rigorous principle: a party seeking equity must demonstrate unwavering intent to perform and approach the Court with clean hands.
