Time Is Not the Essence in Property Sales—Waiver Through Later Payment Revives Contract: Supreme Court Restores Specific Performance Despite Termination Notice

“Where Vendors Accept Additional Payment Beyond Deadline, They Waive Right to Terminate for Delay”— Supreme Court of India emphatically reaffirmed the principle that in contracts for sale of immovable property, acceptance of a later payment amounts to a waiver of time-based termination rights. Reversing a Madras High Court judgment that had denied specific performance and ordered refund of consideration, the Court upheld the buyer’s right to enforce the contract, citing the vendors' own conduct as evidence of a continuing agreement.

The Court held, “Once the vendors accepted ₹1,95,000 after the expiry of the six-month period, their right to forfeit for delay stood waived and the contract remained alive.” This definitive pronouncement reinstates the standard that contracts for sale of immovable property are not automatically terminated by lapse of time, especially where the parties’ conduct reflects otherwise.

“Signature on Receipt Creates Presumption of Consideration—Burden Lies on Vendor to Rebut”: SC Rejects Defence of Blank Paper Signature

Rejecting the High Court’s finding that the acknowledgment of ₹1,95,000 was not proved, the bench of Justices J.B. Pardiwala and Manoj Misra ruled that the sellers had admitted their signatures on the endorsement and bore the burden to dislodge the legal presumption under the Indian Evidence Act.

“Once existence of signature(s) on a document acknowledging receipt of money is admitted, a presumption would arise that it was endorsed for good consideration. A heavy burden lay on the defendants to explain the signature, especially when it appears on a registered document.”

The High Court had dismissed this critical endorsement as fabricated, claiming that it was post-dated. But the Supreme Court castigated that view as an impermissible re-appreciation of evidence under Section 100 CPC. The appellate court had already found that the defendants had signed the acknowledgment, and the High Court’s interference without a finding of perversity was termed legally unsustainable.

“Suit for Specific Performance Maintainable Even Without Declaratory Relief When Termination Is a Breach Post-Waiver”

The Court dismissed the contention that the buyer should have sought a declaration invalidating the vendors' termination notice. Highlighting that the vendors had already received additional consideration even after the deadline, the Court held that any subsequent termination was a “repudiatory breach” and not an action under a valid contractual right.

The Court reasoned, “Where there is no clause in the contract conferring a unilateral right of termination, or such right stands waived, any purported termination is merely a breach and does not necessitate a declaratory challenge.”

It added that the plaintiff was well within his rights to treat the contract as subsisting and directly seek enforcement. “By accepting further payments, the vendors not only waived their right to terminate but also confirmed that the contract was still operational.”

“Specific Performance Is Not a Bounty But a Right When Conduct and Equity Favour the Plaintiff”

The High Court had declined specific performance, invoking its discretionary powers under Section 20 of the Specific Relief Act, 1963, alleging that the plaintiff had not approached the Court with clean hands—mainly because he had falsely claimed possession and had delayed enforcement.

But the Supreme Court rejected both grounds. It clarified that a mere failure to prove possession does not imply a falsehood, unless it is knowingly misstated.

“A claim, if not proved, does not become false. A statement is false when its maker knows it to be incorrect.” The Court found no mala fides in the plaintiff’s conduct, especially since he had paid ₹6.65 lakh out of ₹6.75 lakh, including the ₹1.95 lakh paid beyond the stipulated period, which the vendors accepted.

Additionally, the vendors had transferred a portion of the property to their daughter (Defendant 3) even before issuing the termination notice, and she had full knowledge of the prior agreement. The Court held, “The transferee was not a bona fide purchaser. She was a related party fully aware of the prior contract.”

It concluded that “this was not a fit case where discretionary relief of specific performance should have been denied.”

“High Court Acted Beyond Its Jurisdiction by Reweighing Evidence in Second Appeal”: SC Reiterates Limits of Section 100 CPC

In one of the strongest rebukes to the High Court’s approach, the Court reiterated the narrow scope of Section 100 CPC and held that the High Court had no basis to interfere with findings of fact regarding execution of the agreement and payment of the additional amount.

“A second appellate court exercising power under Section 100 CPC can interfere with a finding of fact only if it is perverse, based on inadmissible evidence, or in complete ignorance of relevant material. That threshold was never met in this case.”

The Supreme Court categorically stated that the High Court had transgressed its jurisdiction, ignoring settled limitations on re-evaluating factual determinations made by the lower courts.

The Supreme Court allowed the appeal, set aside the High Court’s judgment dated 02.02.2018, and restored the first appellate court’s decree for specific performance in favour of Annamalai. The Court directed that the plaintiff shall deposit the remaining ₹10,000 in the execution court, if not already done, within one month, in terms of Order XX Rule 12-A of the CPC.

The Court concluded: “We are of the considered view that the High Court erred in law by interfering with the decree of specific performance passed by the first appellate court.”

Date of Decision: 29 October 2025