A landmark ruling by the Kerala High Court has clarified that in suits for specific performance, the plaintiff’s readiness and willingness must strictly conform to the express terms of the agreement. Any attempt to alter payment terms through unpledged adjustments of prior advances will defeat the claim, regardless of factual possession of funds.
Background & Facts
The Dispute
The plaintiff, Thomaskutty, entered into an agreement for sale (Ext.A1) dated 07.09.2011 with the defendants for the purchase of 1.50 acres of land at a total consideration of Rs.1,50,00,000/-. The performance period under Ext.A1 was fixed until 11.08.2012. The plaintiff alleged non-performance and filed a suit for specific performance. During the pendency of the suit, the parties partially performed the agreement by executing Ext.A8 Sale Deed dated 11.04.2014, conveying 75 cents (half the land) for Rs.1,01,15,000/-. The remaining 75 cents were subject to a new agreement, Ext.A2, dated 23.06.2014.
Key Facts
- Ext.A1: Agreed sale of 1.50 acres (60.70 ares) for Rs.1,50,00,000/-; performance deadline: 11.08.2012
- Ext.A8: Sale deed dated 11.04.2014 for 75 cents at Rs.1,01,15,000/-
- Ext.A2: New agreement dated 23.06.2014 for the remaining 75 cents at Rs.2,37,50,000/-
- Advance paid under Ext.A2: Rs.10,00,000/- (expressly acknowledged in Clause 7)
- Plaintiff claimed an additional Rs.29,87,150/- from Ext.A1 advance remained with defendants and should be adjusted against Ext.A2
- No mention of such adjustment in Ext.A2
- Written statement did not specifically deny the claim of Rs.29,87,150/- being held by defendants
Procedural History
- 07.09.2011: Ext.A1 agreement executed
- 11.08.2012: Deadline for performance under Ext.A1 expired
- 11.04.2014: Ext.A8 Sale Deed executed for half the land
- 23.06.2014: Ext.A2 agreement executed for remaining land
- 10.04.2016: Deadline for performance under Ext.A2 expired
- 2012: Original suit filed in II Additional Sub Court, Ernakulam (OS No.743 of 2012)
- 18.03.2019: Trial Court dismissed specific performance claim; decreed return of Rs.10,00,000/- with interest
- 2019: Regular First Appeal filed before Kerala High Court (RFA No.206 of 2019)
- 17.06.2026: Judgment delivered by Division Bench
Relief Sought
The plaintiff sought:
- Specific performance of Ext.A2, with balance consideration to be calculated after adjusting Rs.29,87,150/- from Ext.A1
- Alternatively, return of Rs.39,87,850/- (Rs.10,00,000/- + Rs.29,87,150/-) with 12% interest from 23.06.2014
- Charge on the property for the entire amount
The Legal Issue
The central question was whether a plaintiff’s alleged readiness and willingness to perform a sale agreement can be established by proposing an adjustment of prior advances not contemplated in the agreement, and whether non-denial of such an assertion in the written statement constitutes an admission binding the parties to a modified contract.
Arguments Presented
For the Appellant/Petitioner
The learned counsel argued that:
- The plaintiff had paid Rs.29,87,150/- under Ext.A1, which remained with the defendants
- This amount was not denied in the written statement, and under Order VIII Rules 3 and 5 CPC, it must be deemed admitted
- The adjustment of this amount towards Ext.A2 was a mutual understanding, even if not reduced to writing
- The plaintiff’s willingness to pay the balance after adjustment should be accepted as compliance with Ext.A2
- The trial court erred in ignoring the admitted factual position
For the Respondent/State
The respondents contended that:
- Ext.A2 was a complete, self-contained agreement
- Clause 7 explicitly acknowledged only Rs.10,00,000/- as advance
- No reference was made to prior payments or adjustment mechanisms
- The plaintiff’s claim of adjustment was introduced for the first time in the amended plaint and was not supported by evidence
- Parties are bound by the written terms; oral understandings cannot override express contractual provisions
The Court's Analysis
The Court emphasized that specific performance is an equitable remedy granted only when the plaintiff demonstrates readiness and willingness to perform the agreement strictly in accordance with its terms. The plaintiff’s pleaded readiness - to pay the balance after adjusting Rs.29,87,150/- from Ext.A1 - was fundamentally at variance with Ext.A2, which made no provision for such adjustment.
"Evidently, the readiness and willingness of the plaintiff is not in terms of Ext.A2. This cannot be considered as the readiness and willingness of the plaintiff to perform Ext.A2 agreement."
The Court rejected the argument that non-denial in the written statement amounted to an admission of a contractual modification. While the defendants did not specifically deny holding Rs.29,87,150/-, this only established factual possession, not contractual obligation to treat it as part of Ext.A2’s consideration. The Court held:
"If the said amount of Rs.29,87,150/- was also agreed to be treated as part of the advance sale consideration under Ext.A2, there was no reason why it was not mentioned in Ext.A2. In fact, there is not even an attempt to explain such non-inclusion."
The Court further noted that the plaintiff failed to plead or prove any separate oral agreement regarding adjustment. The absence of such a plea in the plaint, coupled with no evidence, rendered the claim legally unsustainable.
However, the Court accepted that the defendants were in possession of Rs.29,87,150/-, admitted by non-denial, and since no claim of damages was made, the amount must be returned. The trial court’s decree was therefore modified to include this sum.
The Verdict
The appeal was allowed in part. The trial court’s decree was modified to direct the return of Rs.39,87,850/- (Rs.10,00,000/- under Ext.A2 + Rs.29,87,150/- from Ext.A1) with interest at the rate of 6% per annum from 23.06.2014 until realization, and a charge on the plaint schedule property for the entire amount. All other terms of the trial court decree, including the rejection of specific performance, were affirmed. The appellant was awarded proportionate costs throughout.
What This Means For Similar Cases
Contractual Terms Override Unpledged Adjustments
- Practitioners must ensure that any proposed adjustment of prior payments is explicitly incorporated into the agreement
- Courts will not imply terms not written into the contract, even if funds are held by the other party
- Amended pleadings introducing new financial adjustments without supporting evidence will be rejected
Non-Denial ≠ Contractual Admission
- Failure to deny an averment under Order VIII Rule 5 CPC establishes factual truth, not contractual obligation
- To bind parties to a modified agreement, the modification must be pleaded and proved as a separate term
- Mere possession of funds does not equate to contractual liability to apply them toward a different agreement
Specific Performance Requires Strict Compliance
-
Readiness and willingness must mirror the exact terms of the agreement
-
Courts will not grant specific performance if the plaintiff seeks to alter payment mechanics unilaterally
-
Any deviation, however reasonable, invalidates the claim unless contractually agreed
-
Always draft sale agreements with clear adjustment clauses if prior payments are to be carried forward
-
In litigation, avoid relying on unpleaded oral understandings - they are legally unenforceable
-
When seeking return of funds, plead the basis of entitlement clearly: whether as advance, deposit, or unjust enrichment
