Suit For Specific Performance Cannot Be Decreed If Plaintiff Fails To Prove Financial Capacity And Fails To Explain Delay In Filing Suit: Punjab & Haryana High Court

"This failure on the part of plaintiffs in fact establishes that plaintiffs were not ready and willing to perform their part of contract and they have slept over their rights till last day of limitation." Punjab & Haryana High Court, in a significant ruling, held that a suit for specific performance cannot be decreed merely because it is filed within the limitation period if the plaintiff fails to demonstrate continuous readiness and willingness.

A bench of Justice Parmod Goyal observed that the conduct of the plaintiff, including unexplained delay in approaching the court and failure to prove financial capacity to pay the balance consideration, are critical factors in exercising discretionary relief. The court emphasized that the "readiness and willingness" of a plaintiff is not a mere theoretical requirement but a question of fact that must be established through evidence.

The appellants/defendants preferred this regular second appeal against a First Appellate Court judgment which had reversed a trial court order dismissing the respondents' suit for specific performance. The dispute arose from an agreement to sell dated June 12, 1985, involving property owned by the defendants, where the plaintiffs claimed the defendants failed to execute the sale deed despite the plaintiffs' father being present at the Sub-Registrar's office on the final agreed date.

The primary questions before the court were whether the plaintiffs had established their continuous readiness and willingness to perform the contract as required under Section 16(c) of the Specific Relief Act, 1963. The court was also called upon to determine the legal impact of filing a suit at the very end of the three-year limitation period and the necessity of proving financial capacity to pay the balance consideration.

Mandatory Requirement Of Readiness And Willingness Under Section 16(c)

The High Court observed that the issue of readiness and willingness is no longer res integra and has been extensively analyzed by the Supreme Court. Referring to the statutory mandate, the bench noted that Section 16(c) of the Specific Relief Act bars the relief of specific performance in favour of a person who fails to aver and prove their readiness and willingness to perform the essential terms of the contract. The court highlighted that this requirement is a condition precedent for the grant of such discretionary relief.

"The primary question for determination is whether the respondent-plaintiff has proved his readiness and willingness to perform his part of the contract or not?"

Court Explains Distinction Between Pleading And Proving Financial Capacity

The bench emphasized that a mere plea in the markings of a plaint is insufficient to satisfy the requirements of the law. To prove readiness, a plaintiff must adduce evidence to show the availability of funds to make payment in terms of the contract within the stipulated time. The court noted that the plaintiff must specifically plead how the funds would be available, such as through personal savings or arrangements with a financier, and that failure to prove financial capacity is fatal to the suit.

"To aver and prove readiness and willingness to perform an obligation to pay money, in terms of a contract, the plaintiff would have to make specific statements in the plaint and adduce evidence to show availability of funds to make payment."

Impact Of Unexplained Delay In Approaching The Court

The court dealt extensively with the fact that the suit was filed exactly three years after the cause of action arose, on the final day of limitation. While acknowledging that time is generally not of the essence in contracts for immovable property, the bench held that the "time element cannot be completely ignored." It observed that the conduct of a party claiming equitable relief must be beyond reproach, which includes approaching the court with promptitude and diligence.

"The requirement is not that the plaintiff should continuously approach the defendant with payment... however, the plaintiff must be found standing with the contract and the plaintiff's conduct should not be carrying any such blameworthiness so as to be considered inequitable."

Adverse Inference Against Plaintiff For Ignoring Performance Notices

The High Court found that the defendants had successfully proven the issuance of a legal notice in June 1986, shortly after the initial default, offering to execute the sale deed. The evidence of the author of the notice and the postman established that the plaintiffs' predecessor had refused to accept the registered envelope. The bench held that the failure of the plaintiffs to accept this offer or provide a justification for the three-year delay in filing the suit raised a strong adverse inference against them.

"Not accepting the offer of appellants/defendants to execute the sale deed on 30.06.1986 goes to show that it was plaintiffs/respondents who had defaulted as they have failed to get the sale deed executed in their favour when so offered."

Discretionary Relief Cannot Be Granted For "Sleeping Over Rights"

Concluding the analysis, the court stated that the First Appellate Court erred by not appreciating that the plaintiffs failed to prove their financial capacity and continuous willingness throughout the period leading up to the suit. It held that the discretion to allow specific performance cannot be exercised in favour of those who sleep over their rights until the last day of limitation. However, since the agreement was never formally cancelled, the court directed the return of the earnest money with interest.

"The discretion to allow specific performance, therefore, cannot be exercised in favour of plaintiffs... who have failed to prove their readiness and willingness throughout to succeed in the suit."

The High Court allowed the appeal and set aside the judgment of the First Appellate Court. The suit for specific performance was dismissed, though the defendants were directed to refund the earnest money of Rs. 5,000 along with 9% per annum interest from the date of receipt until realization.

Date of Decision: 07 July 2026