SC on Readiness and Willingness to Perform Contract

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February 22, 2018

Case name: Kalawati (D) Through LRs. & Ors. v. Rakesh Kumar & Ors.

Date of Judgement: February 16, 2018

In the case, the subject matter of the appeal was specific performance of an agreement to sell which mainly pertained to specific performance of the agreement to sell. The Apex Court in the case took a strong note of the situation that even after 31 later, the parties were not quite sure about the fate of the agreement to sell entered into in 1986. The Court also noted that such period was extremely long and such a lapse of time for the enforcement of a contract were major impediments for ease of doing business.

Brief Facts of the case: In the case, Rakesh Kumar had filed suit for specific performance for the agreement to sell and for possession of the land in dispute. Along with the plaint, an application was filed by Rakesh Kumar for an injunction against alienation of the land in dispute. Rakesh Kumar was granted an interim injunction subject to his depositing the balance sale consideration for restraining the defendants from alienating the land in dispute. However, Rakesh Kumar did not deposit the balance sale consideration.

In the meanwhile during the pendency of the suit, the defendants transferred the land in dispute to third parties and the stand taken by the defendants was that Rakesh Kumar himself was not ready and willing to perform his part of agreement and therefore no relief could be granted to him. It was also averred that Rakesh Kumar did not have the necessary finances to pay the consideration amount and so was not prepared to have the sale deed executed in his favour.

The Trial Court dismissed Rakesh Kumar’s suit on the ground that he was not ready and willing to execute the contract, at all times and that from his cross-examination it was evident that Rakesh Kumar did not have the resources and sufficient money to purchase the disputed land.

Feeling aggrieved, Rakesh Kumar preferred an appeal wherein the High Court allowed the appeal and took the view that rather than Rakesh Kumar, it was the defendants who were not willing to execute the sale deed.

Aggrieved by High Court’s order, the Appellants approached the Supreme Court.

Bench’s Verdict

The Supreme Court in view of the facts and circumstances in the case set aside the High Court’s order and made following observations in the case:

Distinction between readiness to perform a contract and willingness to perform contract

While explaining this point, the Supreme Court made reference to its judgment in the case of His Holiness Acharya Swami Ganesh Dassji v. Sita Ram Thapar[1], wherein the Court drew a distinction between readiness to perform the contract and willingness to perform the contract. It was observed that by readiness it may be meant the capacity of the plaintiff to perform the contract which would include the financial position to pay the purchase price.

As far as the willingness to perform the contract is concerned, conduct of the plaintiff has to be properly scrutinized along with attendant circumstances. The factum of readiness and willingness to perform plaintiff’s part of the contract is to be adjudged with reference to the conduct of the party and the attending circumstances.

Readiness and Willingness to Perform the Contract shall be subsisting

Reference was also made to the case of I.S. Sikandar (Dead) by Lrs. v. K. Subramani &Ors.[2], wherein the Court noted that the plaintiff is required to prove that from the date of execution of the agreement of sale till the date of the decree, he was always ready and willing to perform his part of the contract.

With reference to the facts and circumstances of the present case, the Supreme Court upheld the Trial Court’s view on the ground that the plaintiff had no money to pay the balance sale consideration and was apparently not capable of making necessary arrangements for payment of the balance consideration.

That the plaintiff is required to prove the fact that right from the date of execution of the agreement of sale till the date of passing the decree he must prove that he is ready and has always been willing to perform his part of the contract as per the agreement. However, there was nothing on record to show that the plaintiff could have made arrangement for payment of the balance consideration amount to them.

That the material on record clearly indicated that Plaintiff did not have the necessary funds available with him to pay the balance consideration. In view of this, the Court held that the Plaintiff was neither ready nor willing to perform his part of the agreement.

The entire case can be accessed here.

[1] (1996) 4 SCC 526

[2] (2013) 15 SCC 27