Non-Deposit of Balance Amount During Suit Doesn't Prove Lack Of Readiness: Bombay High Court Grants Specific Performance Of 1978 Oral Agreement

"Merely because the original Plaintiff and the original Defendant were friends and neighbours does not mean that an oral agreement entered into between them would have no sanctity and should not be specifically enforced." Bombay High Court, in a significant ruling , held that a plaintiff's failure to deposit the balance sale consideration during the pendency of a suit cannot be used to conclude that they lacked the readiness and willingness to perform their part of a contract.

A single-judge bench of Justice Firdosh P. Pooniwalla observed that the non-deposit of the balance amount is not a valid ground for the dismissal of a specific performance suit, while directing the buyer of a property to pay an additional Rs. 25 lakhs to the seller's heirs to balance the equities of a real estate transaction delayed since 1978.

BACKGROUND OF THE CASE

The original plaintiff and defendant entered into an oral agreement in 1978 for the sale of a residential flat in Wadala, Mumbai, for a total consideration of Rs. 50,000, out of which Rs. 30,000 was paid as part performance. The defendant later refused to hand over possession, citing changed personal circumstances, and attempted to refund the money, which the plaintiff refused to accept. The trial court rejected the plaintiff's subsequent suit for specific performance and merely directed a refund of the earnest money, prompting the legal heirs of the plaintiff to file the present first appeal before the High Court.

LEGAL ISSUES

The primary question before the court was whether the original plaintiff had demonstrated continuous readiness and willingness to perform his part of the oral agreement as required under the law. The court was also called upon to determine whether the plaintiffs were entitled to the discretionary relief of specific performance after a lapse of several decades, and how the massive appreciation in property prices should impact the equitable relief.

COURT'S OBSERVATIONS

The court first examined the trial court's finding that the plaintiff was not ready and willing to pay the balance consideration of Rs. 20,000. Rejecting the lower court's reasoning that the plaintiff's failure to deposit the balance amount in court during the suit indicated a lack of readiness, the High Court relied on Explanation (i) to Section 16(c) of the Specific Relief Act, 1963, and the Supreme Court's precedent in P. Daivasigamani v. S. Sambandan. The bench noted that a plaintiff is not required to tender the money to the defendant or deposit it in court unless explicitly directed, provided the averment of readiness is substantively made out in the pleadings and conduct.

"As far as depositing of the amount by the Plaintiffs is concerned, non-deposit of balance amount cannot be a ground for dismissal of the Suit as laid down by the Hon’ble Supreme Court."

Addressing the conflicting factual claims regarding who breached the agreement, the bench emphasized that since both original parties had passed away, oral evidence carried limited value. The court stressed that in such civil disputes, decisions must rest on the preponderance of probability established by contemporaneous documentary evidence. The court noted that the original plaintiff's letters from September 1981 explicitly requested possession of the flat for his daughter's impending marriage, which firmly corroborated his continuous readiness to finalize the transaction, whereas the defendant's contemporaneous letters lacked any mention of the plaintiff's alleged inability to pay.

"The oral evidence given in this case is of limited value as the original Plaintiff and the original Defendant had both passed away... In these circumstances, the Court has to look at the contemporaneous documentary evidence."

The High Court heavily criticized the trial court's application of Section 20 of the Specific Relief Act to deny the decree. The lower court had reasoned that enforcing the contract would cause hardship to the defendant's widow and presumed that the plaintiff's daughter must have already married and settled elsewhere over the decades. The High Court dismissed these assumptions as speculative and legally erroneous, holding that the amicable relationship between the parties at the time of the agreement could not be weaponized to defeat a valid, concluded contract.

"The evidence on record does not show anything in the conduct of the original Plaintiff that would deprive the Plaintiffs of getting specific performance of the oral agreement."

"Having regard to the fact that the agreement in question was entered into between the parties in 1978 and considering the steep rise in the price of flats in Mumbai, I am of the opinion that interests of justice would be served if the Plaintiffs are directed to pay some more amount to the Defendant."

Finally, addressing the balancing of equities required for granting specific performance, the court acknowledged the massive appreciation in real estate values in Mumbai since 1978. While ruling that denying specific performance would cause grave prejudice to the plaintiffs—especially since the defendant had retained possession despite receiving over sixty percent of the sale consideration—the court held that the defendant's legal heirs must be adequately compensated for the time lapse. Consequently, the court ordered the plaintiffs to pay an additional Rs. 25 lakhs over and above the remaining Rs. 20,000 balance to balance the scales of justice.

"Although this would be much less than the consideration of the suit flat today, it would certainly balance the equities between the parties. On the one hand, the Plaintiffs will get specific performance, and on the other hand, the Defendants will get an extra amount of Rs. 25 lacs."

The High Court allowed the first appeal and set aside the 2007 judgment of the Bombay City Civil Court. The court decreed the suit for specific performance in favour of the plaintiffs, subject to the condition that they pay a consolidated sum of Rs. 25,20,000 to the defendants to acquire possession of the flat.

Date of Decision: 01 April 2026