Supreme Court on Specific Performance of Contract in Real Estate Dispute.

Headnote

The Supreme Court restored the first appellate court’s decree for specific performance of a contract for sale of immovable property. The Court held that where the purchaser pays the major portion of the consideration and the vendor accepts further additional sum after the stipulated period, such conduct amounts to waiver of the vendor’s right to forfeit and signifies readiness and willingness. The High Court’s interference with the factual findings of the first appellate court was found unjustified under Section 100 CPC.

Background

• The appellant (Annamalai) had entered into a registered Agreement for Sale dated 08.01.2010 with the vendors for a property. The consideration was fixed at ₹4,80,000, of which ₹4,70,000 was paid upfront. Subsequently the vendors demanded an additional ₹2,00,000, of which ₹1,95,000 was paid and endorsed on the back of the agreement.

• The vendors later purportedly terminated the contract and sold part of the property to a third party (Vasanthi) by a sale deed dated 17.08.2010.

• In Suit No. 73 of 2010 the appellant claimed specific performance; in Suit No. 32 of 2011 (renumbered 60 of 2012) Vasanthi claimed a declaration and injunction as a bona fide purchaser.

• The Trial Court dismissed the appellant’s suit for specific performance and decreed Vasanthi’s suit. The first appellate court reversed this — granting specific performance to the appellant and dismissing Vasanthi’s suit.

• The High Court then allowed second appeals by the vendors/third-party and set aside that decree, ordering refund of advance money. The appellant appealed to the Supreme Court.

Court’s Observations

• The first appellate court’s findings that:

1. the agreement was a valid agreement for sale;
2. the appellant paid the major part of consideration including additional ₹1,95,000;
3. the appellant was ready and willing to perform;
4. were based on factual appreciation and not perverse.
5. • The High Court erred in discarding the endorsement (₹1,95,000 receipt) when signatures were admitted and the first appellate court had considered the oral evidence.
6. • The vendor’s acceptance of additional sum after expiry of six months (and endorsement) signified waiver of any forfeiture clause and recognition of the contract’s subsistence. Hence, time not being the essence, non-serving of notice or delay did not defeat readiness and willingness.
7. • On maintainability: the claim for specific performance without a separate declaration was acceptable because the vendors had no right to unilaterally terminate the contract (only forfeiture clause) and by their conduct they waived the right.
8. • On discretionary relief: the High Court’s reasons for declining were unsustainable — (i) time was the essence was incorrectly held, and (ii) alleged false case and possession issues did not justify denial when the contract was enforceable and vendor’s conduct showed waiver.

Legal Provisions Discussed

• Section 55, Indian Contract Act, 1872 – acceptance of performance after agreed time.

• Section 10 & Section 14, Specific Relief Act, 1963 – enforceability of specific performance of contracts for immovable property (as applicable before 2018 amendment).

• Section 20, Specific Relief Act, 1963 – discretion as to decreeing specific performance.

• Section 100, Code of Civil Procedure, 1908 – powers of revision in second appeals, ground for interference with findings of fact.

Decision

The appeal was allowed. The Supreme Court set aside the High Court’s judgment, restored the first appellate court’s decree in favour of the appellant for specific performance, and directed accordingly.

Citation: 2025 INSC 1267

Case: Annamalai v. Vasanthi & Ors.

Court: Supreme Court of India

Coram: Justice Manoj Misra

Date of Decision: 29 October 2025

Civil Appeal (Arising out of SLP (C) Nos. 26848-26849 of 2018)