Mere Non-Deposit of Sale Balance Is Not Fatal to Specific Performance Claims: Andhra High Court

In a recent judgement, Andhra High Court clarified that a plaintiff need not deposit the balance consideration in court unless explicitly directed, as long as readiness and willingness are demonstrated. Andhra Pradesh High Court upheld a trial court decree directing the defendant to execute a sale deed for the disputed property. The court also modified the decree to include an additional payment of ₹3,00,000 to the defendant and imposed interest on the balance sale consideration. Justice T. Mallikarjuna Rao ruled that the plaintiff met the requirements under Section 16(c) of the Specific Relief Act and demonstrated readiness and willingness to perform her part of the contract.
The decision, while balancing equities, highlights that mere escalation in property prices during litigation does not bar the grant of specific performance but can justify awarding equitable relief to the defendant.
The dispute revolved around a property sale agreement executed on February 7, 2014, between the plaintiff (respondent) and the defendant (appellant). The plaintiff agreed to purchase the property for ₹15,00,000, paying an advance of ₹3,75,000 and agreeing to pay the balance of ₹11,25,000 by May 7, 2014. The defendant refused to execute the sale deed, alleging that the agreement was fabricated and claimed the earnest money was merely a loan. In response, the plaintiff filed a suit for specific performance in 2014, which was decreed in her favor by the trial court. The defendant appealed, primarily arguing the plaintiff's lack of readiness and willingness and questioning the validity of the agreement.
The Court reiterated that compliance with Section 16(c) of the Specific Relief Act, 1963 requires the plaintiff to prove both readiness (financial ability) and willingness (conduct consistent with performing contractual obligations). The court observed:
"Readiness relates to financial capacity, while willingness is gauged by the plaintiff’s conduct in fulfilling their contractual obligations. Both must co-exist for a decree of specific performance."
The plaintiff presented evidence, including fixed deposit receipts and legal notices, showing she had sufficient funds and had repeatedly approached the defendant to complete the sale. The Court found that the plaintiff’s actions satisfied the twin requirements under Section 16(c).
Justice T. Mallikarjuna Rao clarified that mere non-deposit of the sale balance in court does not disqualify the plaintiff:
"It is not essential for the plaintiff to actually tender the money or deposit it in court, except when so directed by the court. What is essential is the demonstration of the ability and intent to pay."
The Court rejected the defendant’s argument that the plaintiff lacked financial capacity, emphasizing that the plaintiff had made arrangements for the remaining amount through fixed deposits totaling ₹9,00,000 and other resources.
The defendant contended that the sale agreement was fabricated and alleged that her signatures were obtained on blank stamped papers. However, during cross-examination, the defendant admitted to signing the agreement and receiving money. The Court held that this admission constituted a judicial admission:
"Judicial admissions are the best evidence and shift the burden of proof onto the party making them. Unless convincingly rebutted, they stand as conclusive proof."
The Court also noted that the defendant, being a manager at a steel plant and well-educated, could not plausibly claim to have signed blank papers without understanding the consequences. The testimony of attesting witnesses further corroborated the plaintiff’s case. The Court concluded:
"The defendant’s claim of signing blank stamped papers lacks credibility, particularly given her professional and educational background."
The defendant argued that the trial court failed to consider the significant escalation in property prices, which made granting specific performance inequitable. The Court dismissed this contention, observing:
"Escalation in property prices during litigation does not by itself constitute a ground to deny specific performance. However, it may justify equitable relief in the form of additional compensation to the defendant."
In line with the principles laid down in Nirmala Anand v. Advent Corporation Private Limited, the Court awarded the defendant an additional sum of ₹3,00,000 to balance equities. The Court further directed the plaintiff to pay interest at 18% per annum on the outstanding balance of ₹11,25,000 from May 7, 2014, until the date of deposit.
The Court emphasized that specific performance is a discretionary remedy that depends on the conduct of the parties. Justice Rao observed:
"Once an agreement to sell is proved to be legal and valid, and the plaintiff establishes readiness and willingness, the court must ordinarily grant specific performance unless inequitable circumstances warrant otherwise."
The High Court partially allowed the appeal, modifying the trial court’s decree. The key directions were as follows:
The defendant must execute the sale deed upon the plaintiff depositing the outstanding balance of ₹11,25,000 with 18% interest from May 7, 2014, until the date of deposit.
The plaintiff was ordered to pay an additional ₹3,00,000 to the defendant within two months.
If the defendant fails to execute the sale deed, the court will do so on her behalf.
The Court upheld the trial court’s findings that the plaintiff had fulfilled her obligations and that the defendant’s refusal to execute the sale deed was unjustified. Justice Rao concluded:
"The conduct of the plaintiff has been consistent and equitable, while the defendant’s actions reflect an attempt to evade her obligations. The trial court’s judgment is based on sound appreciation of evidence and requires no interference except for the modifications indicated above."
Key Takeaways from the Judgment
Judicial Admissions Carry Significant Weight: The defendant’s admission during cross-examination about signing the agreement and receiving money proved crucial in upholding the decree for specific performance.
Specific Performance Is Discretionary but Favorable to Plaintiffs Who Fulfill Obligations: The Court reiterated that the remedy of specific performance is granted when the plaintiff demonstrates readiness and willingness, and no substantial inequity is caused to the defendant.
Escalation in Property Prices Alone Does Not Defeat Specific Performance: While property price escalation is not a bar to specific performance, courts may award additional compensation to balance equities.

Role of Conduct in Equitable Remedies: The plaintiff’s consistent efforts to honor the agreement contrasted with the defendant’s evasive behavior, leading the Court to exercise its discretion in favor of the plaintiff.
 

Date of Decision: January 3, 2025