Non-Deposit Of Balance Amount Not Fatal To Specific Performance Suit: Bombay High Court Decrees 1978 Flat Sale

Bombay High Court, in a significant ruling dated April 1, 2026, held that the mere non-deposit of the balance sale consideration by a purchaser during the pendency of a suit cannot be a ground to deny the relief of specific performance. While dealing with an oral agreement for the sale of a flat dating back to 1978, a single-judge bench of Justice Firdosh P. Pooniwalla observed that non-deposit of the balance amount cannot be a ground for dismissal of the suit, thereby protecting the statutory rights of buyers who demonstrate continuous readiness and willingness to perform their contractual obligations.

The dispute stems from a 1978 oral agreement between two neighbors to sell a flat in Mumbai for ₹50,000, out of which the original plaintiff paid ₹30,000 as part performance. Despite receiving more than half the consideration, the defendant inducted his brother into the flat and later attempted to repudiate the contract by returning the money via cheques, claiming he needed the property for personal use. The Bombay City Civil Court rejected the plaintiff's plea for specific performance in 2007, reasoning that the plaintiff had failed to deposit the balance ₹20,000 in court during the suit's pendency, prompting the heirs of the original plaintiff to file the present first appeal.

The primary question before the court was whether the original plaintiff was continuously ready and willing to perform his part of the oral contract, despite not depositing the balance consideration in court. The court was also called upon to determine whether the plaintiffs were entitled to the discretionary relief of specific performance under the Specific Relief Act after a lapse of several decades.

The court first examined the trial court's finding that the plaintiff lacked readiness and willingness because the balance amount of ₹20,000 was never deposited. The bench heavily relied on the Supreme Court's pronouncement in P. Daivasigamani v. S. Sambandan, clarifying that Explanation (i) to Section 16(c) of the Specific Relief Act, 1963, explicitly states that actual tender or deposit of money in court is not an absolute essential requirement unless directed by the court. The high court noted that the plaintiff had consistently proven his intention to pay through contemporaneous documentary evidence, particularly a letter sent in September 1981 urgently demanding possession.

"In these circumstances, the grounds on which the Trial Court has held that the original Plaintiff was not ready and willing to perform his part of the said oral agreement are erroneous and without any basis."

Addressing the evidentiary challenges posed by the fact that both original parties had passed away, the court emphasised the paramount importance of contemporaneous documents. The bench observed that the original defendant's defence—claiming the plaintiff had no money in October 1978—was conspicuously absent from his own correspondence at the time. The court found the unchallenged testimony of the plaintiff's son regarding their continuous capacity and willingness to pay to be highly persuasive, ruling that cases of this nature must be decided on the preponderance of probability favoring documented history.

"The oral evidence given in this case is of limited value as the original Plaintiff and the original Defendant had both passed away, and their children who gave evidence, did not have personal knowledge of most of the facts involved. In these circumstances, the Court has to look at the contemporaneous documentary evidence."

The court then analysed the statutory discretion to grant specific performance under the pre-amendment Section 20 of the Specific Relief Act. Relying on the five-pronged test laid down by the Supreme Court in Kamal Kumar v. Premlata Joshi, the bench systematically verified the existence of a concluded contract, readiness and willingness, actual part performance, and equitable considerations. The court strongly rejected the trial court's reasoning that the friendly relationship between the parties or the subsequent marriage of the plaintiff's daughter were valid, logical grounds to deny specific relief.

"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."

Finally, turning to the massive time gap between the 1978 agreement and the 2026 judgment, the court acknowledged the severe prejudice caused to the plaintiffs who were deprived of the flat despite paying over fifty percent of the agreed price. However, recognizing the astronomical rise in Mumbai real estate prices over nearly five decades, the court invoked its equitable jurisdiction. To balance the scales and prevent unjust hardship to the defendant's heirs, the bench directed the plaintiffs to pay an additional ₹25 lakhs over and above the pending ₹20,000 to secure the decree.

"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."

Setting aside the 2007 judgment of the City Civil Court, the High Court allowed the first appeal and granted the decree of specific performance in favour of the appellants. The court directed that the appellants must pay a total sum of ₹25,20,000 to the respondents to balance the equities, thereby bringing equitable closure to a real estate dispute spanning nearly half a century.

Date of Decision: 01 April 2026