Section 16(c) Specific Relief Act | Continuous Readiness & Willingness Must Be Proven Until Decree Execution Despite Vendor's Default: Allahabad HC

The Allahabad High Court has affirmed that a plaintiff seeking specific performance of a property sale agreement must prove continuous readiness and willingness to perform, and that failure by the vendor to fulfill a condition precedent - such as obtaining freehold status - cannot be used to deny relief when the buyer has consistently demonstrated both financial capacity and intent to perform. The judgment reinforces that equitable relief is not forfeited merely due to rising property values or procedural gaps, provided the plaintiff’s conduct remains bona fide.

Background & Facts

The Dispute

The plaintiff, Shivani Hospital Private Ltd., filed a suit for specific performance of a registered agreement to sell dated 22.10.2012, seeking enforcement of a contract to purchase a residential plot in Kanpur Nagar. The vendor, Dharam Prakash Nangia, agreed to sell plot no. A-10, Block C, Sarvodaya Nagar, admeasuring 1,352 square yards (1,130.41 square metres), for a consideration of ₹5.25 crores. The agreement stipulated that the vendor would first obtain freehold status for the leasehold property from the Kanpur Development Authority (KDA) and then execute the sale deed upon receipt of the balance consideration.

Key Facts

• The disputed property was leasehold and required conversion to freehold by the vendor under the KDA’s jurisdiction.
• The agreement was registered on 07.11.2012 in Book No. 1, Zild No. 7095, Serial No. 8557.
• An earnest money of ₹2 crores was paid by the plaintiff via cheques on and after 22.10.2012.
• An additional ₹41 lakhs was paid by the plaintiff on 14.03.2014, 28.11.2014, and 05.02.2015 for expenses related to obtaining freehold status.
• The agreement required the vendor to obtain freehold status by December 2014 and notify the buyer before executing the sale deed.
• Dharam Prakash Nangia died on 04.07.2015 without obtaining freehold status or notifying the plaintiff.
• The defendants, Mimansa Nangia, Shailja Nangia, and Shahnaz Faisal (legal heirs), inherited the property under a registered Will dated 03.10.2011.
• The plaintiff’s cheques for the earnest money included one for ₹38 lakhs, dishonoured on 11.12.2012 but honoured on 17.12.2012.
• The plaintiff sent 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 execution of the sale deed.
• The plaintiff’s director, Dr. Shivakant Mishra, and advocate Sanjiv Kumar Tiwari, were present at the sub-registrar office on 05.01.2016 with draft sale deed and cheque book.
• The defendants filed a legal notice on 28.08.2015 seeking cancellation of the agreement, alleging the plaintiff was not ready and willing.
• The plaintiff deposited ₹2.84 crores (balance consideration) with the trial court on 29.05.2025.

Procedural History

• 22.10.2012: Registered agreement to sell executed between Dharam Prakash Nangia and Shivani Hospital Private Ltd.
• 07.11.2012: Agreement registered at Sub-Registrar Office, Zone-4, Kanpur Nagar.
• 14.03.2014 to 05.02.2015: Plaintiff paid ₹41 lakhs via cheques for freehold expenses.
• 04.07.2015: Vendor Dharam Prakash Nangia died without obtaining freehold status.
• 28.08.2015: Defendants sent legal notice demanding cancellation of agreement.
• 24.10.2015, 30.11.2015, 23.12.2015: Plaintiff issued notices fixing dates for sale deed execution.
• 03.11.2015, 05.12.2015, 05.01.2016: Plaintiff’s representatives present at sub-registrar office; defendants absent.
• 17.01.2017: Plaintiff filed O.S. No. 50 of 2017 for specific performance.
• 21.03.2025: Trial Court decreed the suit, directing defendants to execute sale deed upon receipt of ₹2.84 crores.
• 28.03.2025: Defendants filed First Appeal No. 485 of 2025 under Section 96 CPC.
• 06.05.2026: Allahabad High Court dismissed the appeal.

The Parties' Positions

Plaintiff (Shivani Hospital Private Ltd.):

• Always ready and willing to pay balance consideration of ₹2.84 crores.
• Demonstrated financial capacity through bank statements, balance sheets, and fixed deposits.
• Made multiple attempts to execute sale deed, including physical presence on fixed dates.
• Paid ₹2.41 crores (earnest + freehold expenses) before vendor’s death.
• No fraudulent conduct; the unregistered extension agreement dated 21.12.2014 was not proven, but not proven fraudulent either.

Defendants (Mimansa Nangia, Shailja Nangia, Shahnaz Faisal):

• Claimed the agreement was executed under undue influence due to doctor-patient relationship.
• Argued the property was undervalued (market value ₹10.91 crores vs. ₹5.25 crores).
• Alleged plaintiff lacked financial capacity, citing dishonoured cheque and balance sheets.
• Contended plaintiff failed to appear under Section 32A of the Registration Act.
• Asserted the agreement was time-barred and that the extension document (paper no. 130-C) was forged.
• Claimed defendant no. 2 (Shailja) is mentally disabled and requires the property for residence.

Relief Sought

The plaintiff sought:

• A decree for specific performance of the registered agreement to sell dated 22.10.2012.
• Direction to defendants to execute the sale deed upon receipt of ₹2.84 crores.
• If defendants failed, permission for plaintiff to execute the deed through court after depositing the balance.
• Costs of the suit.

The defendants sought dismissal of the suit with costs, alleging fraud, lack of readiness, undue influence, and limitation.

The Legal Issue

The central question was whether the plaintiff proved continuous readiness and willingness to perform its obligations under the agreement to sell, particularly in light of the vendor’s failure to obtain freehold status, and whether the plaintiff’s conduct disentitled it from equitable relief under Section 16(c) of the Specific Relief Act, 1963.

Arguments Presented

For the Appellant/Petitioner

Shri Rahul Sahai, Senior Counsel for the defendants, argued:

• Section 16(c) of the Specific Relief Act mandates that the plaintiff must prove continuous readiness and willingness from the date of agreement to the date of decree.
• The plaintiff failed to prove financial capacity, citing the dishonoured cheque of ₹38 lakhs and balance sheets showing insufficient cash reserves.
• The unregistered extension agreement dated 21.12.2014 was forged, as confirmed by the notary’s register and handwriting expert DW-3.
• The plaintiff’s presence at the sub-registrar office on 05.01.2016 was insufficient under Section 32A of the Registration Act, which requires both parties to be present.
• The transaction was unconscionable: the property was valued at ₹10.91 crores but sold for ₹5.25 crores, indicating undue influence by Dr. Shivakant Mishra, who was the family physician.
• The plaintiff’s delay in filing the suit (filed on 17.01.2017) and failure to deposit funds until 2025 showed lack of bona fides.
• Relied on Basant Ram v. Sukhbir Singh, Subhash Aggarwal v. Mahender Pal Chhabra, and U.N. Krishnamurthy v. A.M. Krishnamurthy to argue that mere assertion of readiness is insufficient without corroborative evidence.

For the Respondent/State

Shri Manish Goyal, Senior Counsel for the plaintiff, argued:

• The plaintiff proved readiness through bank statements, balance sheets, and fixed deposits, showing capacity to pay ₹2.84 crores.
• The dishonoured cheque was later honoured, and no notice of cancellation was issued by the vendor during his lifetime.
• The plaintiff made repeated attempts to execute the sale deed, including physical presence on three fixed dates with draft deed and cheque book.
• The extension agreement dated 21.12.2014 was not proven fraudulent; its absence did not affect limitation, as the suit was filed within three years of 31.12.2014.
• Section 32A of the Registration Act, as amended in Uttar Pradesh, does not mandate the buyer’s presence for registration.
• The valuation report of ₹10.91 crores was unreliable, as it was based on external inspection only and ignored circle rates of ₹30,000 per square metre.
• The vendor’s failure to obtain freehold status was a material breach, and the legal heirs cannot benefit from their own default.
• Relied on Nathu Lal v. Phool Chand, Faquir Chand v. Sudesh Kumari, and Syed Dastagir v. T.R. Gopalakrishna Setty to argue that readiness and willingness must be judged in spirit and substance, not form.

The Court's Analysis

The Court undertook a meticulous review of the plaintiff’s conduct, the vendor’s obligations, and the legal standards under Section 16(c) of the Specific Relief Act, 1963. It emphasized that the burden of proving readiness and willingness lies squarely on the plaintiff, and that this must be demonstrated not merely by assertion but by consistent conduct.

"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 that the plaintiff lacked financial capacity. It noted that the plaintiff’s balance sheet for FY 2015 - 16 showed total assets of ₹5.33 crores, far exceeding the ₹2.84 crores required. The plaintiff had transferred funds to its current account as needed, a prudent financial practice, and had ultimately deposited the full balance with the trial court on 29.05.2025. The Court held that carrying cash is not required; capacity to pay is sufficient.

The Court also dismissed the argument that the dishonoured cheque of ₹38 lakhs indicated financial incapacity. It found that the cheque was honoured within days, and the vendor accepted the payment without objection. No notice of cancellation was issued by the vendor during his lifetime, indicating his acceptance of the transaction.

Regarding the unregistered extension agreement dated 21.12.2014, the Court held that while its execution was not proven, neither was it proven to be forged. The notary’s register showed no entry, but the absence of a notary’s signature or seal did not equate to fraud. The Court noted that the document, even if genuine, benefited only the vendor by extending his time to obtain freehold status. The plaintiff derived no advantage from it, and the suit was filed within limitation regardless.

On the issue of undue influence, the Court found no evidence of a doctor-patient relationship. Dr. Shivakant Mishra was a neighbour, and the witness who claimed otherwise admitted his own uncle, who signed as witness, was not a patient. The valuation report of ₹10.91 crores was rejected as unreliable, as it was based on external inspection only and ignored the official circle rate of ₹30,000 per square metre, which placed the property’s value at approximately ₹3.4 crores - well below the agreed consideration of ₹5.25 crores.

The Court also held that Section 32A of the Registration Act, as applicable in Uttar Pradesh, does not require the buyer’s presence for registration. The Apex Court in Aloka Bose v. Parmatma Devi and Rattan Singh v. Nirmal Gill had held that the vendee’s signature or presence is not mandatory. The plaintiff’s representatives were present on the fixed dates, and the defendants’ absence constituted a breach.

The Court concluded that the vendor’s failure to obtain freehold status by December 2014, and his subsequent death without fulfilling this condition, was a material default. The legal heirs could not rely on this default to avoid their contractual obligations. The plaintiff’s conduct was consistent, transparent, and in good faith.

The Verdict

The appeal was dismissed with costs. The Allahabad High Court affirmed the trial court’s decree for specific performance. The defendants are directed to execute the sale deed of the disputed property within one month of the judgment date (06.05.2026), upon receipt of the balance sale consideration of ₹2.84 crores from the trial court. If the defendants fail to comply, the plaintiff is at liberty to get the sale deed executed through the court, in accordance with law. The plaintiff’s deposit of ₹2.84 crores on 29.05.2025 extinguishes any further payment obligation.

What This Means For Similar Cases

Continuous Readiness Must Be Demonstrated, Not Asserted

• Practitioners must document financial capacity through bank statements, fixed deposit records, and balance sheets spanning the entire period from agreement to decree.
• Mere verbal assertions of readiness are insufficient; conduct - such as repeated attempts to perform, presence at registration offices, and timely deposit of funds - is critical.
• A single dishonoured cheque does not disqualify a plaintiff if the payment is later honoured and accepted by the vendor.

Vendor’s Default Cannot Be Weaponized by Heirs

• If a vendor fails to fulfill a condition precedent (e.g., obtaining freehold status), the legal heirs cannot invoke that failure to avoid performance.
• The doctrine of nemo dat quod non habet applies: heirs inherit obligations as well as rights under a contract.
• Courts will not allow heirs to benefit from the vendor’s own non-performance.

Section 32A of Registration Act: State Variations Matter

• Section 32A under the Central Act requires buyer and seller presence for photograph and fingerprinting, but state amendments may differ.
• In Uttar Pradesh, buyer presence is not mandatory for registration; practitioners must verify state-specific amendments.
• Always cite Aloka Bose and Rattan Singh to argue that vendee’s presence or signature is not a statutory requirement under UP law.

Valuation Disputes Require Reliable Evidence

• Valuation reports based on external inspection only, without internal assessment, are unreliable.
• Circle rates prescribed under the Stamp Act are the primary benchmark for market value, not speculative valuations.
• A price above circle rate does not indicate undue influence; it may reflect premium for location, structure, or amenities.

Fraud Allegations Require Concrete Proof

• Allegations of forgery or fraud must be substantiated with forensic evidence, not mere denial.
• Absence of a notary’s entry in the register does not prove forgery; it may reflect procedural lapse.
• Courts will not infer fraud from failure to prove a document unless there is affirmative evidence of fabrication.

Limitation Is Not a Shield for Breach

• The limitation period for specific performance under Article 54 of the Limitation Act runs from the date fixed for performance or refusal.
• Even if an extension document is unproven, the original deadline remains the trigger for limitation.
• Delay in filing is not fatal if the suit is within limitation and the plaintiff’s conduct is clean.