Can you file a specific performance suit without challenging contract termination in property disputes?

Case Overview

Court: Supreme Court of India
Coram: Justice J.B. Pardiwala and Justice Manoj Misra
Date of Judgment: 29 October 2025
Case: Annamalai v. Vasanthi and Others (SLP (C) Nos. 26848–26849 of 2018)

1. Factual Background and Procedural History

The litigation arose out of two interconnected civil suits concerning an agreement for sale of immovable property dated 08 January 2010.

Key Facts as Recorded in the Judgment:

• The appellant (Annamalai) entered into an agreement with defendants (D-1 and D-2) to purchase property for ₹4,80,000.
• ₹4,70,000 was paid as advance, with ₹10,000 remaining payable within six months.
• The appellant alleged payment of an additional ₹1,95,000 upon demand, endorsed on the agreement.
• The vendors later issued a termination notice and sold part of the property to a third party (Vasanthi).
• The appellant filed a suit for specific performance, while the third party filed a suit for declaration and injunction.

Procedural History:

• Trial Court (15 February 2013):

• Dismissed the appellant’s suit for specific performance.

• Decreed the suit filed by Vasanthi.

• First Appellate Court (14 November 2014):

• Reversed the trial court.

• Granted specific performance in favour of the appellant.

• High Court (02 February 2018):

• Allowed second appeals.

• Set aside the decree of specific performance and ordered refund of advance money.

• Supreme Court:

• Examined the legality of the High Court’s interference under Section 100 CPC and the denial of specific performance.

2. Identification of Legal Issues

The Supreme Court framed and addressed the following issues:

1. Whether the High Court was justified in interfering with findings of fact regarding payment of additional consideration and readiness and willingness.
2. Whether a suit for specific performance is maintainable without seeking a declaration that termination of the agreement was invalid.
3. Whether the plaintiff was entitled to discretionary relief of specific performance under the law applicable prior to the 2018 amendment.

3. Arguments of the Parties

Appellant’s Submissions

• The first appellate court’s findings on payment and readiness were factual and could not be interfered with under Section 100 CPC.
• Over 90% of the consideration was paid, demonstrating readiness and willingness.
• Acceptance of additional payment by vendors showed the contract subsisted.
• Time was not the essence of the contract for immovable property.

Respondents’ Submissions

• The appellant set up a false case regarding possession and additional payment.
• No steps were taken within six months, indicating lack of readiness and willingness.
• After termination, the suit for specific performance was not maintainable without declaratory relief.

The judgment does not provide exhaustive details of all arguments beyond these principal submissions.

4. Court’s Analysis and Reasoning

(a) Scope of Interference under Section 100 CPC

The Court emphasized that a second appellate court can interfere with findings of fact only in limited circumstances (e.g., perversity, misreading of evidence).

It held that the High Court exceeded its jurisdiction by interfering with the first appellate court’s findings regarding:

• Payment of additional ₹1,95,000
• Plaintiff’s readiness and willingness

(b) Proof of Additional Payment

The Court noted that:

• The defendants admitted their signatures on the endorsement acknowledging payment.
• This created a presumption of valid consideration.

The High Court erred in discarding this evidence without proper reasoning.

(c) Readiness and Willingness

The Court held that readiness and willingness must be assessed holistically, considering conduct and surrounding circumstances.

Key findings:

• The plaintiff paid almost the entire consideration.
• Additional payment reinforced commitment to the contract.
• Acceptance of such payment by vendors indicated waiver of strict timelines.

(d) Effect of Waiver and Subsistence of Contract

By accepting additional payment after the stipulated period:

• Vendors waived their right to forfeit earnest money.
• They treated the contract as subsisting.

Thus, subsequent termination was inconsistent with their conduct.

(e) Necessity of Declaratory Relief

The Court undertook a detailed doctrinal analysis and held:

• Declaratory relief is required only when a cloud exists over the plaintiff’s right.
• Where termination is unilateral and not contractually supported—or where rights are waived—it may be treated as repudiatory breach.

In such cases:

• The plaintiff can treat the contract as subsisting and sue for specific performance without seeking a declaration.

(f) Discretion under Specific Relief Act (Pre-2018 Position)

The Court clarified that:

• The 2018 amendment making specific performance more mandatory is not retrospective.

Applying pre-amendment law:

• Specific performance remains discretionary but guided by judicial principles.

The Court found that denial of relief by the High Court was unjustified because:

• Payment of over 90% of consideration was established.
• The claim of additional payment was wrongly rejected.
• Mere failure to prove possession does not amount to a false claim.
• Vendors acted non-bona fide by selling property to a related party prior to termination.

(g) Treatment of Precedents

The Court relied on and discussed:

• Ravinder Singh v. Sukhbir Singh
• Babu Lal v. Hazari Lal Kishori Lal
• Katta Sujatha Reddy v. Siddamsetty Infra Projects (P) Ltd.

These were used to clarify principles on falsity of claims, possession, and retrospective application of amendments.

5. Final Conclusion and Holding

The Supreme Court:

• Allowed the appeal.
• Set aside the High Court’s judgment.
• Restored the decree of specific performance granted by the first appellate court.
• Directed the appellant to deposit the balance consideration if not already done.

Ratio / Core Legal Principle:

1. A suit for specific performance is maintainable without seeking declaratory relief where termination is unilateral, unsupported by contract, or waived by conduct.
2. Acceptance of additional consideration after the stipulated period indicates waiver and subsistence of the contract.
3. High Courts cannot interfere with findings of fact under Section 100 CPC unless strict legal thresholds are met.
4. Discretionary relief of specific performance cannot be denied on unsustainable grounds such as unproven possession or mischaracterized evidence.