Mere Rise in Land Prices No Ground to Evade Sale Agreement: Supreme Court Upholds 24-Year-Old Specific Performance Decree, Cancels Collusive Transfers

“Courts Must Enforce Lawful Agreements Even After Decades—Equity Demands Justice, Not Opportunism”, In a remarkable reaffirmation of the sanctity of lawful agreements, the Supreme Court delivered a landmark verdict, where it upheld a decree of specific performance despite the passage of 24 years and subsequent collusive sale transactions. The Court, speaking through Justices Sanjay Kumar and K.V. Viswanathan, rejected the seller’s attempt to evade contractual obligations by citing price escalation and collusive transfers, emphatically holding that “mere escalation of land prices is no defence against specific performance where readiness and willingness to perform are proven.”

This judgment is a resounding declaration that “fraudulent transfers and opportunistic price inflation cannot defeat lawful rights flowing from a valid contract.”

The case originated from an Agreement to Sell dated 08.10.2001 executed by Krishan Gopal, agreeing to sell over 9 acres of agricultural land to Gurmeet Kaur and her two sons for ₹10,00,000. After paying ₹1,00,000 as earnest money, the purchasers filed a suit for specific performance when the seller failed to execute the sale deed by 31.01.2002.

The seller resisted the claim alleging the purchasers lacked readiness to pay the balance ₹9,00,000 and further claimed the land was in possession of a third party, Arun Kalia. Intriguingly, while the suit was pending, Krishan Gopal executed clandestine sale deeds in May 2002 in favour of Arun Kalia, who later transferred the land to other parties.

All lower courts—including the Trial Court, First Appellate Court, and High Court—concurrently found that the purchasers were ready and willing to perform their part of the contract and decreed specific performance. The matter reached the Supreme Court after years of protracted litigation, with additional challenges mounted by the third-party purchasers.

The Supreme Court dismissed the seller’s contention on readiness, observing that “it is well-settled that to prove readiness and willingness, a purchaser is not required to produce the entire sale consideration in cash or at hand; financial capacity and conduct suffice.” The Court endorsed the findings of the lower courts that the plaintiffs had sound financial standing supported by bank statements and asset ownership.

Critically, the Court denounced the collusive transfers effected by the seller and his proxy, Arun Kalia, branding them legally void. It ruled that “the two registered sale deeds executed on 29.05.2002 by Krishan Gopal during the pendency of litigation and subsequent transfers by Arun Kalia on 04.04.2012 are hit by Section 52 of the Transfer of Property Act, 1882 and the doctrine of lis pendens,” thereby rendering them null and void.

The Court remarked on the fraudulent scheme, noting that “the self-serving tale of an oral tenancy agreement followed by a clandestine sale reeks of collusion and fraud.” It condemned the seller’s duplicity in attempting to defeat the purchasers’ rights by secretly conveying the land to a proxy despite being party to a binding agreement.

Addressing the argument that the purchasers had not sought possession in their plaint, the Court invoked Section 22 of the Specific Relief Act, 1963, to hold, “failure to formally plead for possession is a curable omission, and the Court is empowered to grant possession to enforce equity and complete justice.”

Perhaps the most significant observation came on the issue of land value appreciation. Rejecting the seller’s plea that the land prices had increased astronomically, the Court firmly stated, “escalation of land prices, however steep, is not by itself a ground to deny specific performance where readiness and willingness are established.” The Court, however, in the interest of equity, directed the purchasers to pay an additional ₹25,00,000 along with the original sale consideration to balance fairness.

The Court concluded by declaring the later sale deeds void and directed the Sub-Registrar to cancel these fraudulent entries. In a ringing endorsement of the rule of law, it affirmed, “Courts exist to enforce lawful rights, not to reward fraud and opportunism.”

In its closing pronouncement, the Court reiterated the principle that “justice demands the enforcement of lawful contracts, not the accommodation of afterthought defences built on collusion and price speculation.”

This judgment marks a strong statement by the Supreme Court that the passage of time, collusive transfers, or market dynamics cannot erode the enforceability of valid contracts, especially where conduct demonstrates bona fide intent and readiness to perform.

Date of Decision: 15th July 2025