The Allahabad High Court has reaffirmed that the grant of specific performance under the Specific Relief Act, 1963 hinges on the plaintiff’s continuous readiness and willingness to perform their obligations from the date of the agreement through to the decree. In this case, the plaintiff’s sustained financial capacity, documented conduct, and proactive efforts to complete the transaction outweighed the defendants’ failure to fulfill their contractual duties, leading to the affirmation of the trial court’s decree.
Background & Facts
The Dispute
The plaintiff, Shivani Hospital Private Ltd., sought specific performance of a registered agreement to sell dated 22.10.2012 for the purchase of a residential plot (Plot No. A10, Block C, Sarvodaya Nagar, Kanpur Nagar) measuring 1,352 square yards (1,130.41 square metres) from Dharam Prakash Nangia, the father of the three defendants. The property was leasehold, and the agreement stipulated that the seller would obtain freehold status from the Kanpur Development Authority (KDA) before executing the sale deed.
Key Facts
- The sale consideration was fixed at ₹ 5.25 crores, with ₹ 2 crores paid as earnest money at the time of agreement execution on 22.10.2012.
- The balance consideration of ₹ 3.25 crores was to be paid upon execution of the sale deed.
- The seller was obligated to obtain freehold status from KDA by December 2014 and notify the buyer in writing before the sale deed could be executed.
- An additional ₹ 41 lakhs was paid by the plaintiff to the seller on four occasions: ₹ 7 lakhs (14.03.2014), ₹ 8 lakhs (14.03.2014), ₹ 20 lakhs (28.11.2014), and ₹ 6 lakhs (05.02.2015) for expenses related to freehold conversion.
- The cheque for ₹ 38 lakhs (part of the earnest money) issued on 03.12.2012 was dishonoured on 11.12.2012 but subsequently honoured on 17.12.2012, as admitted by defendant DW-2.
- Dharam Prakash Nangia filed an application for freehold conversion with KDA only on 21.08.2014, four months before the December 2014 deadline.
- The KDA file showed the application was forwarded to the competent authority on 30.05.2015, but no permission was granted before Dharam Prakash Nangia’s death on 04.07.2015.
- No written intimation was ever given by the seller or his heirs to the plaintiff that freehold status had been obtained.
- The plaintiff issued legal notices on 24.10.2015, 30.11.2015, and 23.12.2015, fixing dates of 03.11.2015, 05.12.2015, and 05.01.2016 for the execution of the sale deed.
- On each of these dates, the plaintiff’s director Dr. Shivakant Mishra and advocate Sanjiv Kumar Tiwari were present at the sub-registrar’s office with draft sale deeds and cheque books, but the defendants failed to appear.
- The plaintiff filed a tender receipt on 29.05.2025, depositing ₹ 2.84 crores (the remaining balance) with the trial court.
- The defendants claimed the agreement was executed under undue influence due to the doctor-patient relationship between Dr. Shivakant Mishra and Dharam Prakash Nangia, and that the property was undervalued at ₹ 5.25 crores against a market value of ₹ 10.91 crores.
- Defendant DW-5, a valuer, prepared a report valuing the property at ₹ 10.91 crores in 2012 - 13, but admitted he did not inspect the interior of the property and valued it at ₹ 72,000 per square yard, far above the circle rate of ₹ 26,000 - 30,000 per square metre.
- The defendants also alleged the existence of a fraudulent notarised extension agreement dated 21.12.2014 (Paper No. 130-C), which the trial court found unproven but did not declare forged.
- The defendants’ father executed a registered Will dated 03.10.2011, bequeathing 50% to defendant no.1, 20% to defendant no.2, and 30% to defendant no.3.
- Defendant no.2 is reportedly mentally handicapped since birth and resides with defendant no.1.
- Defendant no.3, Shahnaz Faisal, converted to Islam and married in 1993, and resides with her husband in Prem Nagar, Kanpur.
Procedural History
- 22.10.2012: Registered agreement to sell executed.
- 04.07.2015: Dharam Prakash Nangia died.
- 28.08.2015: Defendants issued legal notice to plaintiff seeking cancellation of agreement.
- 03.11.2015, 05.12.2015, 05.01.2016: Plaintiff appeared at sub-registrar office as per notices; defendants did not.
- 17.01.2017: Plaintiff filed O.S. No. 50 of 2017 for specific performance.
- 21.03.2025: Trial Court decreed specific performance, directing plaintiff to pay ₹ 2.84 crores and defendants to execute sale deed within two months.
- 06.05.2026: Allahabad High Court dismissed the appeal and affirmed the trial court’s decree.
The Parties' Positions
Plaintiff (Shivani Hospital Private Ltd.): Asserted continuous readiness and willingness to pay the balance consideration, demonstrated by financial statements, bank records, multiple appearances at the sub-registrar, and eventual deposit of ₹ 2.84 crores. Argued that the seller’s failure to obtain freehold status and communicate it constituted a breach.
Defendants (Mimansa Nangia, Shailja Nangia, Shahnaz Faisal): Contended the agreement was void due to undue influence, inadequate consideration, and fraudulent extension of time. Argued the plaintiff lacked financial capacity, failed to appear as required under Section 32A of the Registration Act, and that the suit was time-barred. Claimed defendant no.2 would be rendered homeless if the property was sold.
Relief Sought
The plaintiff sought a decree for specific performance directing the defendants to execute the sale deed upon receipt of the balance consideration of ₹ 2.84 crores, and in default, to permit the plaintiff to execute the deed through the court. The plaintiff also sought costs.
The Legal Issue
The central question was whether the plaintiff had established continuous readiness and willingness to perform under Section 16(c) of the Specific Relief Act, 1963, despite the seller’s failure to obtain freehold status, and whether the plaintiff’s conduct - particularly regarding the disputed extension agreement and financial capacity - disqualified it from equitable relief.
Arguments Presented
For the Appellant/Petitioner
Counsel for the defendants argued that the plaintiff failed to prove continuous readiness and willingness. Key contentions included:
- The plaintiff’s cheque for ₹ 38 lakhs was dishonoured, indicating financial incapacity.
- The valuation report showed the property was undervalued, suggesting undue influence.
- The notarised extension agreement dated 21.12.2014 was forged, disentitling the plaintiff from equitable relief under Section 16(b).
- The plaintiff’s representative was not present at the sub-registrar on the fixed dates, violating Section 32A of the Registration Act, 1908.
- The suit was time-barred as the cause of action arose in December 2014.
- The defendants’ handicapped daughter would suffer irreparable hardship if the property was sold.
For the Respondent/State
Counsel for the plaintiff countered that:
- The dishonoured cheque was later honoured, and the plaintiff’s financial capacity was proven through bank statements and balance sheets showing assets exceeding ₹ 5.33 crores by 2016.
- The valuation report was unreliable, as the valuer did not inspect the property and used rates far above circle rates.
- The extension agreement, even if unproven, was not fraudulent; it benefited the seller and was not used to extend limitation.
- The plaintiff appeared on all fixed dates with draft deeds and cheque books, and the absence of the buyer under Section 32A is not mandatory in Uttar Pradesh.
- The seller’s failure to obtain freehold status and communicate it constituted a material breach, relieving the plaintiff of any obligation to tender payment before the seller fulfilled their condition precedent.
- The plaintiff’s deposit of ₹ 2.84 crores with the trial court on 29.05.2025 conclusively proved readiness and willingness.
The Court's Analysis
The Court undertook a meticulous review of the plaintiff’s conduct and financial position against the legal requirements under Section 16(c) of the Specific Relief Act, 1963, and relevant precedents including Syed Dastagir v. T.R. Gopalakrishna Setty, Faquir Chand v. Sudesh Kumari, and N.P. Thirugnanam v. Dr. R. Jagan Mohan Rao.
The Court held that readiness refers to financial capacity, while willingness is inferred from conduct. The plaintiff need not carry cash but must demonstrate the capacity to pay and a consistent intention to perform. The Court found that the plaintiff’s bank statements and balance sheets conclusively established financial capacity. The ₹ 2.84 crores deposited with the trial court on 29.05.2025 was not merely a procedural step but a substantive affirmation of readiness.
"The compliance of readiness and willingness has to be in spirit and substance and not in letter and form."
The Court rejected the defendants’ claim of undue influence. The alleged doctor-patient relationship was unsupported by documentary evidence. The valuer’s report was dismissed as unreliable due to lack of physical inspection and inflated valuation based on non-official rates. The circle rate of ₹ 30,000 per square metre translated to a valuation of ₹ 3.40 crores, making the ₹ 5.25 crore consideration reasonable.
Regarding the notarised extension agreement dated 21.12.2014, the Court noted that while its execution was unproven, the trial court did not find it forged. The Court emphasized that the document, if genuine, benefited the seller by extending the deadline. No fraud was established, and Section 16(b) was not attracted.
On Section 32A of the Registration Act, the Court distinguished between the Central Act and the Uttar Pradesh amendment. Under the UP version, the presence of the buyer is not mandatory for registration. The Apex Court in Aloka Bose v. Parmatma Devi and Rattan Singh v. Nirmal Gill affirmed that the vendee’s signature or presence is not essential. The plaintiff’s representatives were present on all notified dates, and attendance certificates were filed.
The Court held that the seller’s failure to obtain freehold status and communicate it constituted a breach of the condition precedent. The plaintiff’s repeated attempts to perform, despite the seller’s inaction, demonstrated willingness. The defendants’ notice of 28.08.2015 seeking cancellation, followed by non-appearance on fixed dates, confirmed their bad faith.
The Court also rejected the limitation defence. The last date for performance was 05.01.2016, making the suit filed on 17.01.2017 well within the three-year period under Article 54 of the Limitation Act, 1963.
The Verdict
The appellant’s appeal was dismissed with costs. The Allahabad High Court affirmed the trial court’s decree dated 21.03.2025. The defendants are directed to execute the sale deed of the disputed property within one month of the judgment date (06.05.2026) in favour of the plaintiff, upon receipt of the balance sale consideration of ₹ 2.84 crores from the trial court. In default, the plaintiff is at liberty to get the sale deed executed through the court, in accordance with law.
What This Means For Similar Cases
Continuous Readiness Must Be Demonstrated, Not Assumed
- Practitioners must ensure pleadings and evidence explicitly trace the plaintiff’s financial capacity and conduct from the date of agreement to the date of decree.
- Bank statements, balance sheets, fixed deposit records, and deposit receipts are critical evidence.
- Mere assertion of readiness is insufficient; contemporaneous documentation is required.
Seller’s Breach of Condition Precedent Excuses Buyer’s Non-Tender
- If the contract makes the seller’s performance (e.g., obtaining freehold) a condition precedent to the buyer’s payment obligation, the buyer need not tender payment until that condition is fulfilled.
- Failure by the seller to perform or communicate fulfillment constitutes a material breach, entitling the buyer to seek specific performance.
Valuation Disputes Must Be Grounded in Official Data
- Expert valuations based on non-official rates or without physical inspection are likely to be rejected.
- Circle rates under the Stamp Act are the primary benchmark for market value in property disputes.
- Claims of undervaluation must be substantiated with credible, verifiable data.
Section 32A Variations Across States Are Crucial
- The applicability of Section 32A of the Registration Act varies by state.
- In Uttar Pradesh, buyer presence is not mandatory for registration; practitioners must verify state-specific amendments.
- Attendance certificates and witness testimony remain vital to prove willingness.
Fraud Allegations Require Concrete Proof
- Mere unproven documents do not equate to fraud.
- To invoke Section 16(b), the plaintiff’s conduct must be shown to be intentionally deceptive or dishonest.
- Courts will not infer fraud from evidentiary gaps unless there is affirmative proof of malice or concealment.
