This Is Not a Case of Greed Simplicitor but a Celebration of Fraud: Karnataka High Court Grants Specific Performance, Slams Vendor for Violating Court Orders

Fraud Vitiates Everything — Including a Defence Plea: High Court of Karnataka in M/s Sun Rama Exports Pvt. Ltd. V. Smt. Shantha Srinivas & Anr. Delivered a scathing and precedent-setting judgment, granting specific performance in favour of the plaintiff-buyer and condemning the vendor for “celebration of fraud” by deliberately breaching a lawful agreement and violating subsisting court orders. The Division Bench, comprising Justices Krishna S. Dixit and G. Basavaraja, denounced the vendor’s conduct as a “gross abuse of the judicial process” and overturned the trial court’s refusal to grant the equitable remedy of specific performance. The Court held: “This is a textbook case warranting decree of specific performance inasmuch as plaintiff satisfies all parameters for the same and the 1st defendant deserves no indulgence whatsoever.” 
 

The plaintiff, M/s Sun Rama Exports Pvt. Ltd., had entered into an agreement on 17.02.2001 with the first defendant, Smt. Shantha Srinivas, to purchase a property for Rs.74,80,000, supported by an advance payment of Rs.25 lakhs — Rs.22.3 lakhs in cash and Rs.2.7 lakhs via cheque. On the same day, another agreement was executed with a reduced price of Rs.52,50,000, allegedly for tax-related considerations. The plaintiff claimed readiness and willingness to perform the contract, but the vendor backed out, failing to fulfil her obligations related to conversion and tax clearance. 
 
Despite an interim status quo order by the trial court, the 1st defendant executed a sale deed in favour of the 2nd defendant. The trial court, while acknowledging the plaintiff’s partial performance, denied specific performance and only directed refund of the advance amount. The plaintiff appealed, and the 1st defendant filed cross-objections, even challenging the order to refund. 
 

The High Court exhaustively addressed the enforceability of the agreements, the doctrine of novation, readiness and willingness under Section 16© of the Specific Relief Act, violation of judicial orders, and the equitable relief of specific performance. 
 
The Court found the agreements and payments fully proved. “As a concomitant of this, the receipt of cash component i.e., Rs.22,30,000/- is proved beyond doubt,” the Court stated, dismissing the vendor’s denial as “absolutely unworthy of belief.” 
 
Rejecting the plea of novation, the Court clarified: “Mere alteration to the structure of the terms of the contract is insufficient. The substitution must have the effect of completely rescinding, altering or extinguishing the previous contract.” 
 
Crucially, the Court held that “Plaintiff was ready & willing to perform his part of obligation,” and labelled the contrary trial court finding “unsustainable.” The vendor’s argument that the plaintiff delayed performance was found unmeritorious, as the defendant herself failed to obtain conversion orders and tax clearance. 
 
But it was the fraudulent sale to the 2nd defendant that drew the Court’s sharpest rebuke. “Apparently, apart from violating court order, the 1st defendant has played fraud not only on the Court but, on plaintiff as well, if not on the 2nd defendant too,” the Court observed. Citing S.P. Chengalvaraya Naidu v. Jagannath, the Bench reiterated: “Fraud vitiates everything.” 
 
The sale made during pendency of t”e status quo order under Section 52 of the Transfer of Property Act was held invalid against the plaintiff’s rights. “Doctrine of lis pendens does not depend upon absence of notice to purchaser,” the Court reiterated, holding that a sale in defiance of a judicial order cannot be protected under equity or law. 
 
The Court minced no words in criticising the vendor’s cross-objection. “To add insult to the injury, 1st defendant has filed Cross Objections… This is not a case of greed simplicitor but a celebration of fraud,” the Bench observed with indignation. 
 
The High Court allowed the appeal and decreed specific performance in favour of the plaintiff. It simultaneously dismissed the cross-objection and the claim of the 2nd defendant. The ruling stands as a strong reaffirmation of the principle that equity favours the vigilant, not the fraudulent. In the words of the Court: “When law is breached, equity must prevail. Equity shifted to the plaintiff's side because of culpable conduct of the 1st defendant.” 
 
Date of Decision: April 4, 2025