“In our view, a declaratory relief would be required where a doubt or a cloud is there on the right of the plaintiff and grant of relief to the plaintiff is dependent on removal of that doubt or cloud. However, whether there is a doubt or cloud on the right of the plaintiff to seek consequential relief, the same is to be determined on the facts of each case. For example, a contract may give right to the parties, or any one of the parties, to terminate the contract on existence of certain conditions. In terms thereof, the contract is terminated, a doubt over subsistence of the contract is created and, therefore, without seeking a declaration that termination is bad in law, a decree for specific performance may not be available. However, where there is no such right conferred on any party to terminate the contract, or the right so conferred is waived, yet the contract is terminated unilaterally, such termination may be taken as a breach of contract by repudiation and the party aggrieved may, by treating the contract as subsisting, sue for specific performance without seeking a declaratory relief qua validity of such termination.
2025 INSC 1267
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 1 of 39
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL No……….. OF 2025
(Arising out of SLP (C) No. 26848-26849/2018)
ANNAMALAI …APPELLANT (S)
VERSUS
VASANTHI AND OTHERS …RESPONDENT(S)
J U D G M E N T
MANOJ MISRA, J.
1. Leave granted.
2. These two appeal(s) arise from two suits,
namely, O.S. No. 73 of 2010, which was instituted by
the appellant (Annamalai) against Saraswathi (for
short D-1), Dharmalingam (for short D-2) and
Vasanthi (for short D-3), inter-alia, for specific
performance of agreement for sale dated 08.01.2010,
and O.S. No. 32 of 2011 (renumbered O.S. No. 60 of
Digitally signed by
KAVITA PAHUJA
Date: 2025.10.29
17:04:33 IST
Reason:
Signature Not Verified
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 2 of 39
2012), which was instituted by Vasanthi (first
respondent) against the appellant (Annamalai) for
declaration as well as injunction qua the property
which was subject matter of the sale agreement. Trial
court consolidated the two suits and decided them by
a common judgment, whereby O.S. No. 73 of 2010 was
dismissed and O.S. No. 60 of 2012 (old O.S. No. 32 of
2011) was decreed. Aggrieved therewith, the appellant
filed two first appeal(s). The first appellate court vide
common judgment dated 14.11.2014 allowed the
appeal(s) and thereby decreed O.S. No.73 of 2010 and
dismissed O.S. No. 60 of 2012 (old O.S. No.32 of
2011). Against the first appellate court’s judgment
and decree(s), two second appeal(s), namely, S.A. No.
465 of 2015 and S.A. No. 466 of 2015, were filed by
Vasanthi (i.e., the first respondent) before the High
Court of Judicature at Madras1. Both the appeals were
allowed vide impugned common judgment and
order(s) dated 02.02.2018. As a result, the decree of
specific performance of the agreement was set aside
1High Court
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 3 of 39
and defendant(s) were directed to refund the earnest
money along with interest.
3. Being aggrieved by High Court’s decision
dated 02.02.2018, these appeal(s) have been filed with
a prayer that the impugned judgment and decree(s) be
set aside.
Suit No.73 of 2010
4. Appellant instituted O.S. No. 73 of 2010
alleging, inter alia, that the suit property originally
belonged to Ponnusamy and his daughter Selvi; they
executed registered power(s) of attorney (for short
‘power’) in favour of the appellant and Saraswathi (D1); ‘power’ for the first item of the suit schedule
property was with D-1 whereas ‘power’ for the second
item was with the appellant; based on that ‘power’,
second item was sold to D-1 and his son
Dhamalingam (D-2) vide sale deed dated 07.07.2009;
thereafter, vide registered agreement for sale dated
08.01.2010, D-1, as ‘power’ holder of Ponnusamy and
Selvi qua first item and as co-owner of second item,
and D-2 agreed to sell both items to the appellant for
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 4 of 39
Rs. 4,80,000; out of which, Rs. 4,70,000 was paid in
advance and balance of Rs. 10,000 was to be paid
within six months, though the possession of the
property was handed over to the appellant on the date
of the agreement; however, later, D-1 and D-2
demanded additional amount of Rs.2,00,000 against
which, to buy peace, the appellant agreed to pay, and
paid additional Rs.1,95,000 to D-1 and D-2 on
09.06.2010 and an endorsement to that effect was
made by them on the back of the agreement; in
consequence, the sale consideration increased from
Rs.4,80,000 to Rs.6,75,000, out of which Rs.6,65,000
stood paid and Rs.10,000 remained to be paid on
execution of sale deed; but, on 20.08.2010, D-1 and
D-2 sent notice cancelling/ terminating the contract;
to which, the appellant responded, vide notice dated
04.09.2010, by demanding execution of the sale deed,
inter alia, claiming that the appellant had been
throughout ready and willing to pay the balance
amount of Rs. 10,000; later, it came to the knowledge
of the appellant that D-1 and D-2 had already sold the
first item of the suit schedule property to D-3 on
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 5 of 39
17.08.2010; whereafter, the defendants tried to
trespass the suit property, as a result a complaint was
lodged with police authorities; and, ultimately, the
suit was instituted.
4.1. In the written statement filed in O.S. No. 73 of
2010, defendants, inter alia, resiled from the
agreement dated 08.01.2010 and claimed that it was
an instrument to secure a loan. They also denied the
possession of the appellant over the suit property.
Suit No.32 of 2011 (New No. 60 of 2012)
5. In O. S. No. 32 of 2011 (New No. 60 of 2012)
Vasanthi (i.e., plaintiff therein – D-3 in O.S. No.73 of
2010) claiming herself as owner in possession of the
suit property, being a bona fide purchaser thereof,
sought a declaration and injunction to protect her
possession over the suit property.
5.1. The appellant, who was sole defendant in the
suit instituted by Vasanthi, inter alia, claimed that
Vasanthi is neither in possession nor a bona fide
purchaser for value; she, being daughter of
Saraswathi (D-1 in O.S. No.32 of 2011), was fully
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 6 of 39
aware of the prior agreement and, therefore, the sale
in her favour is nothing but sham.
Trial Court’s Decision
6. The aforesaid two suits were consolidated and
decided by a common judgment and decree(s) dated
15.02.2013. O.S. No. 73 of 2010 was dismissed, inter
alia, holding that – (a) the agreement for sale, dated
08.01.2010, was one to secure loan since it is
unbelievable that after having paid Rs.4,70,000 out of
a total consideration of Rs.4,80,000, a person would
wait for six months for execution of sale deed; (b) the
plaintiff was not ready and willing to perform his part
under the agreement since no notice to execute a deed
of sale was served on D-1 and D-2 within six months;
(c) the endorsement regarding payment of extra
consideration of Rs. 1,95,000 was prepared by using
signature(s) of D-1 and D-2 obtained earlier; (d) the
possession of the suit property was not handed over
to Annamalai (the appellant) as there is no recital in
the agreement evidencing transfer of possession; (e)
even if the agreement dated 08.01.2010 is considered
to be an agreement for sale, it was not acted upon
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 7 of 39
within six months and time being the essence of the
contract, it was justifiably terminated; hence, suit
was liable to be dismissed.
6.1. As regards O.S. No. 32 of 2011 (new no. 60 of
2012), it was held that Vasanthi is owner in
possession of the suit property purchased by her.
Consequently, O.S. No.32 of 2011 was decreed.
First Appellate Court’s decision
7. Aggrieved by trial court’s verdict, Annamalai
(the appellant herein) went in appeal. The first
appellate court held that the view of the trial court
that the agreement dated 08.01.2010 was to secure a
loan is perverse more so when notice dated
20.08.2010 (Exb. A-4), sent on behalf of D-1 and D-2,
acknowledges existence of the agreement for sale as
well as receipt of advance consideration of Rs.
4,70,000. The first appellate court also accepted the
endorsement (Exb.A-2) on the back of the agreement
(Exb.A-1) as an acknowledgment of receipt of
additional Rs. 1,95,000 and found thus: (a) the
agreement dated 08.01.2010 is an agreement for sale;
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 8 of 39
(b) out of a total of Rs.4,80,000 payable towards
consideration, Rs.4,70,000 was paid in advance, but
D-1 and D-2 sought additional Rs. 2,00,000; (c)
plaintiff, however, agreed to pay Rs.1,95,000, which
was paid to D-1 and D-2 who accepted the same and
made an endorsement to that effect on the back of the
agreement on 9.06.2010; (d) in such circumstances,
the plaintiff has established his readiness and
willingness to perform its part under the contract; and
(e) D-3 (Vasanthi), being daughter of D-1, is not a bona
fide purchaser for value more so when sale-deed was
executed in her favour on 17.08.2010, that is, even
before termination of the agreement dated
08.01.2010.
7.1. In consequence, the first appellate court
reversed the decree passed by the trial court and
decreed the suit of the appellant for specific
performance; whereas, the suit of Vasanthi was
dismissed.
High Court’s decision
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 9 of 39
8. Against the judgment and decree(s) of the first
appellate court, two second appeals were filed before
the High Court, namely, (a) S. A. No. 465 of 2015 by
Saraswathi (D-1), Dharmalingam (D-2) and Vasanthi
(D-3) against Annamalai, emanating from O.S. No. 73
of 2010, and (b) S. A. No. 466 of 2015 by Vasanthi
against Annamalai, emanating from O.S. No. 32 of
2011 (New No. 60 of 2012). High Court allowed both
the appeals and directed refund of the advance
consideration with interest. While allowing the second
appeal(s), High Court, inter alia, found – (i) there is no
oral or documentary evidence to show that Annamalai
came into possession of the suit property pursuant to
the sale agreement; (ii) Annamalai did not show any
intention to execute the sale-deed within six months
of the sale agreement, therefore, it could be taken that
plaintiff was not ready and willing to perform its part
under the contract; and (iii) the receipt of Rs. 1,95,000
(Exb. A-2) appears to have been created after
termination notice (Exb. A-4) was served. Based on
those findings, the High Court held Annamalai (i.e.,
the appellant) not entitled to the relief of specific
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 10 of 39
performance. Consequently, the second appeal(s)
were allowed, and the decree of specific performance
was set aside with a direction to refund the earnest
money.
9. We have heard learned counsel for the parties
and have perused the record carefully.
Submissions on behalf of the appellant
10. On behalf of the appellant, it has been
strenuously argued that findings of the first appellate
court qua (i) execution of the agreement for sale; (ii)
payment of advance consideration including
additional amount of Rs. 1,95,000; and (iii) plaintiff
being ready and willing to perform the terms and
conditions of the contract, were based on appreciation
of evidence on record and by no stretch of imagination
could be considered perverse or illegal as to give rise
to a substantial question of law warranting exercise of
powers under Section 100 of the Code of Civil
Procedure, 19082. Further, in a contract to sell
immovable property, ordinarily, time is not the
2 CPC
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 11 of 39
essence of the contract. Moreover, when more than
90% of the agreed sale consideration was already paid
and the defendant(s) had accepted additional
Rs.1,95,000, the question of plaintiff not being ready
and willing does not arise. Besides above, having
accepted additional amount of Rs.1,95,000, after
expiry of six months, there was no occasion to
terminate the agreement for delayed /non-payment of
Rs.10,000. In such circumstances, it was not a case
where the court could have declined the relief of
specific performance, that too, when conduct of the
defendants was not bona fide. Accordingly, it was
prayed that the impugned judgment and decree(s) of
the High Court be set aside and that of the first
appellate court be restored.
Submissions on behalf of respondent(s)
11. Per contra, learned counsel for the respondent
submitted that the appellant is not entitled to
discretionary relief of specific performance, inter alia,
because,- (i) a false case was set up that the
possession of the property was handed over to the
plaintiff at the time of entering the contract; (ii) a
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 12 of 39
fabricated document showing receipt of an additional
sum of Rs. 1,95,000 was set up; (iii) the appellant took
no steps within six months of the agreement to seek
execution of sale deed, therefore, plaintiff cannot be
said to be ready and willing to perform its part under
the agreement; (iv) once the contract was terminated,
suit for specific performance was not maintainable
without seeking a declaration that termination of the
agreement was invalid. Based on above, the
respondent(s) prayed that the appeal(s) be dismissed.
Issues for consideration
12. Upon consideration of the rival submissions
and having regard to the facts of the case, in our view,
following issues arise for our consideration:
A. Whether the High Court was justified in
interfering with the finding of the first appellate
court qua payment of additional amount of Rs.
1,95,000 by the plaintiff-appellant? If receipt of
additional payment by D-1 and D-2 is proved, as
found by the first appellate court, whether it could
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 13 of 39
be held that plaintiff was not ready and willing to
perform its part under the contract?
B. Whether the suit for specific performance was
maintainable without seeking a declaration that
termination of the agreement was invalid in law?
C. Whether in the facts of the case the plaintiff was
entitled to the discretionary relief of specific
performance?
Discussion/ Analysis
13. Before we set out to address the aforesaid
issues, it would be useful to notice the reasons
recorded by the first appellate court to reverse trial
court’s finding that the agreement for sale was a
document to secure a loan. Reasons are:
(a) agreement for sale is a registered document,
therefore a presumption of correctness of the
endorsement made by the Registrar regarding
particulars entered therein would arise;
(b) there is no clear and cogent evidence to
substantiate fraud or to dislodge the presumption;
and
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 14 of 39
(c) notice dated 20.08.2010 (Exb. A-4) sent on
behalf of Saraswathi (D-1) and Dharmalingam (D2) acknowledges the instrument dated 08.01.2010
as an agreement for sale.
13.1. Importantly, the finding of the first appellate
court that instrument dated 08.01.2010 (Exb. A-1)
was an agreement for sale of immovable property
fixing consideration at Rs.4,80,000 and
acknowledging receipt of Rs. 4,70,000 by way of
advance, has not been disturbed by the High Court.
Rather, the High Court itself directed for refund of the
advance money.
Issue A
14. The High Court allowed the second appeal(s),
inter alia, on the ground that, as per the agreement,
the sale deed had to be executed within six months on
payment of balance consideration, therefore time was
of the essence of the contract, and since, within six
months, neither balance amount was paid nor
execution of sale deed demanded, the plaintiff (i.e., the
appellant herein) cannot be considered ready and
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 15 of 39
willing to perform its part under the agreement. While
holding so, the High Court discarded the endorsement
of receipt of Rs.1,95,000 (Exb. A-2) made on the back
of the agreement (Exb. A-1) by observing that no
evidence was led to prove the endorsement.
15. In our view, the High Court committed a
mistake in discarding the endorsement (Exb.A-2).
While discarding the same, it overlooked the finding of
the first appellate court in paragraph 29 of its
judgment which reflected that D-1 and D-2 had
admitted their signature(s) on the page carrying the
endorsement of receipt of Rs.1,95,000 by claiming
that those were obtained on a blank paper. In our
view, once existence of signature(s) on a document
acknowledging receipt of money is admitted, a
presumption would arise that it was endorsed for good
consideration3. Therefore, a heavy burden lay on D-1
and D-2 to explain the circumstances in which their
signatures or thumbmark, as the case may be,
appeared there, particularly, when that endorsement
was on the back of a registered document.
3 See: Section 114 of Indian Evidence Act, 1872 read with Illustration (c) thereto.
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 16 of 39
16. Whether D-1 and D-2 were able to discharge
the aforesaid burden is a question of fact which had
to be determined by a court of fact after appreciating
the evidence available on record. Under CPC, a first
appellate court is the final court of fact. No doubt, a
second appellate court exercising power(s) under
Section 100 CPC can interfere with a finding of fact on
limited grounds, such as, (a) where the finding is
based on inadmissible evidence; (b) where it is in
ignorance of relevant admissible evidence; (c) where it
is based on misreading of evidence; and (d) where it is
perverse. But that is not the case here.
17. In the case on hand, the first appellate court,
in paragraph 29 of its judgment, accepted the
endorsement (Exb. A-2) made on the back of a
registered document (Exb. A-1) after considering the
oral evidence led by the plaintiff-appellant and the
circumstance that signature(s)/thumbmark of D-1
and D-2 were not disputed, though claimed as one
obtained on a blank paper. The reasoning of the first
appellate court in paragraph 29 of its judgment was
not addressed by the High Court. In fact, the High
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 17 of 39
Court, in one line, on a flimsy defense of use of a
signed blank paper, observed that genuineness of
Exb. A-2 is not proved. In our view, the High Court
fell in error here. While exercising powers under
Section 100 CPC, it ought not to have interfered with
the finding of fact returned by the first appellate court
on this aspect; more so, when the first appellate court
had drawn its conclusion after appreciating the
evidence available on record as also the circumstance
that signature(s)/thumbmark(s) appearing on the
document (Exb.A-2) were not disputed. Otherwise
also, while disturbing the finding of the first appellate
court, the High Court did not hold that the finding
returned by the first appellate court is based on a
misreading of evidence, or is in ignorance of relevant
evidence, or is perverse. Thus, there existed no
occasion for the High Court, exercising power under
Section 100 CPC, to interfere with the finding of the
first appellate court regarding payment of additional
Rs. 1,95,000 to D-1 and D-2 over and above the sale
consideration fixed for the transaction.
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 18 of 39
18. Once the finding regarding payment of
additional sum of Rs.1,95,000 to D-1 and D-2
recorded by the first appellate court is sustained,
there appears no logical reason to hold that the
plaintiff (Annamalai) was not ready and willing to
perform its part under the contract particularly when
Rs. 4,70,000, out of total consideration of Rs.
4,80,000, was already paid and, over and above that,
additional sum of Rs.1,95,000 was paid in lieu of
demand made by D-1 & D-2. This we say so, because
an opinion regarding plaintiff’s readiness and
willingness to perform its part under the contract is to
be formed on the entirety of proven facts and
circumstances of a case including conduct of the
parties4. The test is that the person claiming
performance must satisfy conscience of the court that
he has treated the contract subsisting with
preparedness to fulfil his obligation and accept
performance when the time for performance arrives5.
4 See: R.C. Chandiok and another v. Chuni Lal Sabharwal and others, (1970) 3 SCC 140, paragraph 6; followed
in Syed Dastagir v. T.R. Gopalakrishna Setty, (1999) 6 SCC 337, paragraph 13.
5 Ardeshir H. Mama v. Flora Sassoon, AIR 1928 PC 208 = 1928 SCC OnLine PC 43; followed in A.
Kanthamani v. Nasreen Ahmed, (2017) 4 SCC 654
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 19 of 39
19. In the instant case, the plaintiff was required
to pay only Rs.10,000, out of a total of Rs.4,80,000,
within six months from the date of the agreement (i.e.,
8.01.2010). However, within that period, D-1 & D-2
demanded additional Rs.2,00,000. To buy peace,
additional Rs.1,95,000 was paid by the plaintiff on
09.06.2010 regarding which endorsement was made
by D-1 and D-2 on the back of the agreement. No
doubt, balance of Rs.10,000 remained but, by
accepting additional amount after expiry of six
months, D-1 and D-2 treated the agreement as
subsisting and thereby waived their right to forfeit the
earnest money on non-payment of balance
consideration within six months from the date of the
agreement.
20. Generally, time is presumed not to be the
essence of the contract relating to immovable
property. Therefore, onus to plead and prove that time
was the essence of the contract is on the person
alleging it. In cases where notice is given treating time
as the essence of the contract, it is duty of the court
to examine the real intention of the party giving such
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 20 of 39
notice by looking at the facts and circumstances of
each case6. Here, D-1 and D-2 accepted additional
payment of Rs.1,95,000 after expiry of the period of
six months stipulated for making payment of balance
amount of Rs.10,000, and made endorsement to that
effect on the back of the agreement, thereby signifying
that they treat the agreement as subsisting by waiving
their right to forfeit the earnest money on nonpayment of balance consideration within six months7.
In such circumstances, in our view, non-issuance of
notice by the plaintiff, requesting performance within
six months, would not be fatal to the suit for specific
performance and, likewise, it would not be
determinative of whether the plaintiff was ready and
willing to perform its part under the contract.
Consequently, if the first appellate court held that the
plaintiff was ready and willing to perform its part
under the contract, no fault can be found with its
view. In our view, the High Court exceeded its
jurisdiction under Section 100 CPC by interfering with
6 Swarnam Ramachandran (Smt.) and another v. Aravacode Chakungal Jayapalan, (2004) 8 SCC 689.
7 See: Section 55 of the Contract Act, 1872.
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 21 of 39
the finding(s) of the first appellate court regarding (a)
payment of additional Rs.1,95,000 by plaintiff to D-1
and D-2 and (b) plaintiff being ready and willing to
perform its part under the contract. Issue A is decided
in the aforesaid terms.
Issue B
21. Regarding maintainability of the suit for
specific performance without seeking a declaratory
relief qua subsistence of the contract, at the outset,
we may observe that no specific plea to that effect was
raised in the written statement and no issue was
struck in respect thereof. However, as the issue was
raised during arguments, we shall address the same.
22. To appropriately address the said issue, we
must recapitulate the facts. Agreement for sale was
entered on 08.01.2010. Sale consideration was fixed
at Rs.4,80,000. Rs.4,70,000 was paid in advance.
Balance Rs.10,000 had to be paid within six months.
Although the agreement, translated copy of which is
placed on record, neither speaks of automatic
termination of contract nor confers right on the
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 22 of 39
vendors (i.e., D-1 and D-2) to unilaterally terminate
the same for non-payment of balance consideration
within the specified period of six months, stipulates
that if balance consideration is not paid within six
months, the vendee would lose its earnest money.
That is, it speaks of forfeiture of earnest money for
non-deposit of balance consideration. Assuming that
vendor(s) had a right to terminate the contract and
forfeit the earnest money for non-payment of balance
amount within six months, nothing of the kind was
done by the vendor. Rather, as found above, the
vendor(s) (i.e., D-1 and D-2) took additional amount of
Rs.1,95,000 after expiry of six months and made an
endorsement to that effect on the back of the
agreement.
23. Section 55 of the Indian Contract Act, 1872
provides for effect of acceptance of performance at a
time other than agreed upon. It says:
“If, in case of a contract voidable on
account of the promisor’s failure to perform
his promise at the time agreed, the promisee
accepts performance of such promise at any
time other than agreed, the promisee
cannot claim compensation for any loss
occasioned by the non-performance of the
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 23 of 39
promise at the time agreed, unless, at the
time of acceptance, he gives notice to the
promiser of his intention to do so.”
24. In the case on hand, there was no notice of
the kind as envisaged by Section 55 (supra) issued by
the vendor(s). In fact, the termination notice itself was
issued on 20.08.2010 when D-1 and D-2 had already
breached the contract by transferring part of the
property agreed to be sold to D-3 on 17.08.2010.
Moreover, in our view, by making an endorsement of
receipt of Rs.1,95,000 at the back of the contract on
09.06.2010, the vendors not only acknowledged the
subsistence of the contract but also waived their right
to terminate the same or forfeit the advance payment
of Rs.4,70,000 on non-payment of balance Rs.10,000
within six months from the date of the contract. In
this context, we will have to consider whether the
termination notice dated 20.08.2010 created a cloud
on the right of the plaintiff that necessitated a
declaratory relief. If it did, whether in absence of a
declaration, a decree of specific performance could be
passed.
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 24 of 39
When a declaratory relief is essential
25. A declaratory relief seeks to clear what is
doubtful, and which is necessary to make it clear. If
there is a doubt on the right of a plaintiff, and without
the doubt being cleared no further relief can be
granted, a declaratory relief becomes essential
because without such a declaration the consequential
relief may not be available to the plaintiff8. For
example, a doubt as to plaintiff’s title to a property
may arise because of existence of an instrument
relating to that property. If plaintiff is privy to that
instrument, Section 31 of Specific Relief Act, 1963
enables him to institute a suit for cancellation of the
instrument which may be void or voidable qua him. If
plaintiff is not privy to the instrument, he may seek a
declaration that the same is void or does not affect his
rights. When a document is void ab initio, a decree for
setting aside the same is not necessary as the same is
non est in the eye of law, being a nullity. Therefore, in
such a case, if plaintiff is in possession of the property
8 See: Anathula Sudhakar v. P. Buchi Reddy (dead) by L.R.s. and others, (2008) 4 SCC 594
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 25 of 39
which is subject matter of such a void instrument, he
may seek a declaration that the instrument is not
binding on him. However, if he is not in possession,
he may sue for possession and the limitation period
applicable would be that as applicable under Article
65 of the Limitation Act, 1963 on a suit for
possession9. Rationale of the aforesaid principle is
that a void instrument /transaction can be ignored by
a court while granting the main relief based on a
subsisting right. But, where the plaintiff’s right falls
under a cloud, then a declaration affirming the right
of the plaintiff may be necessary for grant of a
consequential relief. However, whether such a
declaration is required for the consequential relief
sought is to be assessed on a case-to-case basis,
dependent on its facts.
26. A breach of a contract may be by nonperformance or by repudiation, or by both. In Anson’s
Law of Contract (29th Oxford Edn.), under the heading
9 See: Prem Singh v. Birbal, (2006) 5 SCC 353; followed in Shanti Devi (since deceased) through LRs v. Jagan
Devi and others, 2025 SCC OnLine SC 1961
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 26 of 39
“Forms of Breach Which Justify Discharge”, it is stated
thus:
“The right of a party to be treated as discharged
from further performance may arise in any one
of three ways: the other party to the contract (a)
may renounce its liabilities under it; (b) may by
its own conduct make it impossible to fulfill
them, (c) may fail to perform what it has
promised. Of these forms of breach, the first two
may take place not only in the course of
performance but also while the contract is still
wholly executory i.e., before either party is
entitled to demand a performance by the other
party of the other’s promise. In such a case the
breach is usually termed an anticipatory breach.
The last can only take place at or during the time
for performance of the contract.”
27. Ordinarily, for a breach of contract, a party
aggrieved by the breach i.e., failure on the part of the
other party to perform its part under the contract can
claim compensation or damages by accepting the
breach as a termination of the contract, or/ and, in
certain cases, obtain specific performance by not
recognizing the breach as termination of the
contract10. In a case where the contract between the
parties confers a right on a party to the contract to
unilaterally terminate the contract in certain
10 See: OPG Power Generation Private Limited v. Enexio Power Cooling Solutions India Pvt. Ltd and another,
(2025) 2 SCC 417, paragraph 106.
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 27 of 39
circumstances, and the contract is terminated
exercising that right, a mere suit for specific
performance without seeking a declaration that such
termination is invalid may not be maintainable. This
is so, because a doubt /cloud on subsistence of the
contract is created which needs to be cleared before
grant of a decree enforcing contractual obligations of
the parties to the contract.
28. Now we shall consider few decisions of this
Court where the question of grant of relief of specific
performance of a contract in teeth of termination of
the contract without seeking a declaration qua
subsistence of the contract was considered. In I.S.
Sikandar v. K. Subramani11, the agreement for sale
stipulated sale within a stipulated time frame; on
failure of the plaintiff to respond to the notice seeking
execution of sale, the agreement was terminated. In
that context, this Court held:
“36. Since the plaintiff did not perform his part
of contract within the extended period in the
legal notice referred to supra, the agreement of
sale was terminated as per notice dated 28-3-
1985 and thus, there is termination of the
11 (2013) 15 SCC 27
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 28 of 39
agreement of sale between the plaintiff and
defendants 1-4 w.e.f. 10-4-1985
37. As could be seen from the prayers sought
for in the original suit, the plaintiff has not
sought for declaratory relief to declare the
termination of agreement of sale as bad in law.
In the absence of such prayer by the plaintiff
the original suit filed by him before the trial
court for grant of decree for specific
performance in respect of the suit scheduled
property on the basis of agreement of sale and
consequential relief of decree for permanent
injunction is not maintainable in law.
38. Therefore, we have to hold that the relief
sought for by the plaintiff for the grant of decree
for specific performance of execution of sale
deed in respect of the suit scheduled property
in his favor on the basis of non-existing
agreement of sale is wholly unsustainable in
law.”
29. In A. Kanthamani12 (supra), the decision in
I.S. Sikandar (supra) was considered, and it was held:
“30.3. Third, it is a well settled principle of law
that the plea regarding the maintainability of
suit is required to be raised in the first instance
in the pleading (written statement) then only
such plea can be adjudicated by the trial court
on its merits as a preliminary issue under
Order 14 Rule 2 CPC. Once the finding is
rendered on the plea, the same can be
examined by the first or/ and second appellate
court. It is only in appropriate cases, where the
court prima facie finds by mere perusal of
plaint allegations that the suit is barred by any
express provision of law or is not legally
maintainable due to any legal provision; a
judicial notice can be taken to avoid abuse of
12 See: Footnote 5
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 29 of 39
judicial process in prosecuting such suit. Such
is, however, not the case here.
30.4. Fourth, the decision relied on by the
learned counsel for the appellant in I.S.
Sikandar turns on the facts involved therein
and is thus distinguishable.”
30. In R. Kandasamy (since dead) and others
v. T.R.K. Sarawathy and another13, this Court
considered both I.S. Sikandar (supra) and A.
Kanthamani (supra), and clarified the law by observing
as under:
“47. However, we clarify that any failure or
omission on the part of the trial court to frame
an issue on maintainability of a suit touching
jurisdictional fact by itself cannot trim the
powers of the higher court to examine whether
the jurisdictional fact did exist for grant of relief
as claimed, provided no new facts were
required to be pleaded and no new evidence
led.”
31. From the aforesaid decisions what is clear is
that though a plea regarding maintainability of the
suit, even if not raised in written statement, may be
raised in appeal, particularly when no new facts or
evidence is required to address the same, the issue
13
(2025) 3 SCC 513
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 30 of 39
whether a declaratory relief is essential or not would
have to be addressed on the facts of each case.
32. In our view, a declaratory relief would be
required where a doubt or a cloud is there on the right
of the plaintiff and grant of relief to the plaintiff is
dependent on removal of that doubt or cloud.
However, whether there is a doubt or cloud on the
right of the plaintiff to seek consequential relief, the
same is to be determined on the facts of each case.
For example, a contract may give right to the parties,
or any one of the parties, to terminate the contract on
existence of certain conditions. In terms thereof, the
contract is terminated, a doubt over subsistence of the
contract is created and, therefore, without seeking a
declaration that termination is bad in law, a decree for
specific performance may not be available. However,
where there is no such right conferred on any party to
terminate the contract, or the right so conferred is
waived, yet the contract is terminated unilaterally,
such termination may be taken as a breach of contract
by repudiation and the party aggrieved may, by
treating the contract as subsisting, sue for specific
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 31 of 39
performance without seeking a declaratory relief qua
validity of such termination.
Plaintiff-appellant was not required to seek a
declaration
33. At the cost of repetition, we may observe that
in the case on hand, by accepting Rs.1,95,000 after
expiry of six months, D-1 and D-2, firstly, waived their
right, as available to them under the contract, to
forfeit the advance consideration/ earnest money,
secondly, by such acceptance and endorsement on
the back of the agreement they treated the contract as
subsisting and, thirdly, by transferring part of the
subject matter of the agreement in favour of D-3, even
before serving a forfeiture notice, they committed a
breach of the contract. In such circumstances, in our
view, the plaintiff had an option to treat the contract
as subsisting and sue for specific performance more
so when termination was a void act, no longer
permissible under the varied contract. In our view,
therefore, the suit for specific performance was
maintainable even without seeking a declaration that
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 32 of 39
termination of the contract was invalid in law. Issue
B is answered accordingly.
Issue C
34. Prior to comprehensive amendments brought
by Act 18 of 2018 to Sections 10, 14 and 20 of the
Specific Relief Act, 1963 (for short the 1963 Act), with
effect from 01.10.2018, Section 10 of the 1963 Act
specified cases in which specific performance of
contract is enforceable. In Katta Sujatha Reddy v.
Siddamsetty Infra Projects (P) Ltd.14, this Court
held that 2018 Amendment to the 1963 Act is
prospective and cannot apply to those transactions
that took place prior to its coming into force. No doubt,
this decision was reviewed and recalled in
Siddamsetty Infra Projects (P) Ltd. v. Katta
Sujatha Reddy15 but in the review order/ judgment
this Court did not specifically hold that the amended
provisions would govern suits instituted prior to the
2018 Amendment (see paragraph 32 of the review
judgment). Rather, in review, this Court proceeded to
14 (2023) 1 SCC 355
15 2024 INSC 861 = 2024 SCC OnLine SC 3214, See paragraph 32
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 33 of 39
decide the matter by assuming that the grant of
specific performance continued to be discretionary to
a suit instituted before the date of the amendment.
Besides above, the judgment impugned in this appeal
was passed on 02.02.2018 i.e., before the amendment
came into effect. Therefore, we proceed to address
issue C based on law that existed on the date when
the impugned judgment was passed.
35. Section 10 of the 1963 Act as it existed prior
to 2018 Amendment provided that the specific
performance of any contract may, in the discretion of
the court, be enforced, inter alia, when there exists no
standard for ascertaining actual damage caused by
the non-performance of the act agreed to be done.
Explanation to Section 10 clarified that unless the
contrary is proved, the court shall, inter alia, presume
that the breach of a contract to transfer immovable
property cannot be adequately relieved by
compensation in money. Section 14 of 1963 Act as it
stood prior to the amendment specified following
contracts which cannot be specifically enforced,
namely, (a) a contract for the non-performance of
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 34 of 39
which compensation in money is an adequate relief;
(b) a contract which runs into such minute or
numerous details or which is so dependent on the
personal qualifications or volition of the parties, or
otherwise from its nature is such, that the court
cannot enforce specific performance of its material
terms; (c) a contract which in its nature determinable;
and (d) a contract the performance of which involves
the performance of a continuous duty which the court
cannot supervise.
36. In the case on hand, the contract does not fall
in category (a) (supra) in view of Explanation to
Section 10 of the 1963 Act as it stood prior to the 2018
Amendment. It also does not fall in category (b)
(supra), (c) (supra) and (d) (supra). While deciding
issue B we have already seen that there was no clause
in the contract conferring a right to terminate the
agreement and insofar as the right of forfeiture was
concerned that stood waived. Consequently, there was
no bar of Section 14 operating against specific
enforcement of the contract. As far as personal bar to
the relief of specific performance is concerned, while
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 35 of 39
deciding issue A, we have already held that the finding
of the first appellate court that the plaintiff was ready
and willing to perform its part under the contract was
not liable to be interfered with by the High Court in
exercise of its power under Section 100 of CPC.
Therefore, what now remains to be considered is
whether the Court should decline the discretionary
relief of specific performance in exercise of its
discretionary power vested in it by Section 2016 of the
1963 Act, as it stood prior to the 2018 Amendment.
37. In the case on hand, the High Court declined
discretionary relief of specific performance on two
counts: (a) time was the essence of contract, no steps
16 Section 20. Discretion as to decreeing specific performance. – (1) The jurisdiction to decree specific
performance is discretionary, and the court is not bound to grant such relief merely because it is lawful to do so;
but the discretion of the court is not arbitrary but sound and reasonable, guided by judicial principles and capable
of correction by a court of appeal.
(2). The following are cases in which the court may properly exercise discretion not to decree specific
performance:-
(a) where the terms of the contract or the conduct of the parties at the time of entering into the contract
or other circumstances under which the contract was entered into are such that the contract, though not
voidable, gives the plaintiff an unfair advantage over the defendant; or
(b) where the performance of the contract would involve some hardship on the defendant which he did
not foresee, whereas its non-performance would involve no such hardship on the plaintiff; or
(c) where the defendant entered into the contract under the circumstances which though not rendering
the contract voidable, makes it inequitable to enforce specific performance.
Explanation 1. – Mere inadequacy of consideration or the mere fact that the contract is onerous to the defendant
or improvident in its nature, shall not be deemed to constitute an unfair advantage within the meaning of clause
(a) or hardship within the meaning of clause (b).
Explanation 2. – The question whether the performance of a contract would involve hardship on the defendant
within the meaning of clause (b) shall, except in cases where the hardship has resulted from any act of the plaintiff
subsequent to the contract, be determined with reference to the circumstances existing at the time of the contract.
(3) The court may properly exercise discretion to decree specific performance in any case where the plaintiff has
done substantial acts or suffered losses in consequence of a contract capable of specific performance.
(4) The court shall not refuse to any party specific performance of a contract merely on the ground that the
contract is not enforceable at the instance of the party.
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 36 of 39
were taken by the plaintiff to get the sale deed
executed within six months; and (b) the plaintiff could
not prove payment of additional Rs.1,95,000 and had
set up a false plea of being in possession of the suit
property therefore, it had not approached the court
with clean hands which disentitled the plaintiff/
appellant for a decree of specific performance.
38. In our view, both grounds to decline the relief
of specific performance are not sustainable. Because,
while deciding issue A (supra), we have already held
that High Court erred in law by setting aside finding
of fact returned by the first appellate court that D-1
and D-2 were paid additional Rs.1,95,000, which they
acknowledged by making an endorsement on the back
of the agreement. In our view, acceptance of additional
money not only signified waiver of the right to forfeit
advance money /consideration but also acknowledged
subsistence of the agreement. Hence, High Court’s
conclusion that plaintiff had set up a false case of
additional payment is unsustainable and, therefore,
cannot be a ground to decline discretionary relief of
specific performance. Insofar as plaintiff’s case of him
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 37 of 39
being in possession of suit schedule property is
concerned, the same was not accepted on the ground
that there was no recital in the agreement regarding
handing over of possession. But that by itself would
not be sufficient to hold that the plaintiff made a false
claim of being in possession. A claim, if not proved,
does not make it false. A statement is false when its
maker knows the same is incorrect17. Otherwise also,
the plaintiff stands to gain nothing substantial by
claiming possession over the suit schedule property in
a suit for specific performance in as much as a decree
of specific performance would ultimately entitle him to
possession18.
39. In the instant case, there is evidence on record
that the Tehsildar had reported regarding possession
of the plaintiff over the suit property though that
report was subject to final adjudication in the suit. In
such circumstances, merely because plaintiff’s claim
that property was in his possession was not accepted,
the relief of specific performance cannot be declined,
17 Ravinder Singh v. Sukhbir Singh and Others, (2013) 9 SCC 245, see paragraphs 18 and 20
18 Babu Lal v. Hazari Lal Kishori Lal, (1982) 1 SCC 525
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 38 of 39
particularly, when the plaintiff had already paid over
90% of the agreed consideration and paid additional
amount also as demanded by D-1 and D-2. Further,
D-3 was a related party of D-1 and D-2 and, therefore,
not a bona fide purchaser. We are, therefore, of the
firm view that this was not a fit case where
discretionary relief of specific performance should
have been denied.
40. For the aforesaid reasons, we are of the
considered view that the High Court erred in law by
interfering with the decree of specific performance
passed by the first appellate court. These appeals are
therefore allowed. The judgment and decree(s) of the
High Court is/are set aside and that of the first
appellate court is/are restored. As it is not clear from
the record before us as to whether the plaintiff has
deposited the balance amount of Rs.10,000 for
execution of the sale deed, in terms of Order XX Rule
12 A of CPC, we deem it appropriate to direct that the
plaintiff-appellant shall deposit the balance amount,
if not deposited already, in the execution court, within
a period of one month from today.
Civil Appeal @ SLP (C) Nos. 26848-26849 of 2018 Page 39 of 39
41. Parties to bear their own costs.
42. Pending applications, if any, shall stand
disposed of.
…………………………………………J.
(J.B. PARDIWALA)
…………………………………………J.
(MANOJ MISRA)
New Delhi;
October 29, 2025