In a significant ruling on the law governing specific performance of property agreements, the Supreme Court has restored the Trial Court's decision refusing to enforce a 2004 agreement for the sale of a valuable property in Udhagamandalam (Ooty). The Court held that although the buyers had entered into a valid agreement and paid substantial advance money, they failed to establish continuous readiness and willingness to complete the transaction an essential requirement for obtaining the equitable relief of specific performance.
The judgment was delivered by a Bench of Justice Prashant Kumar Mishra and Justice N.V. Anjaria on July 31, 2026.
Background of the Case
The dispute arose from an Agreement to Sell executed on April 1, 2004, under which V.N.A.S. Chandran agreed to sell his property at Church Hill Road, Udhagamandalam, to S. Venila for a consideration recorded at ₹2.25 crore. The agreement was accompanied by a General Power of Attorney in favour of Venila's husband, V. Sowrirajan, who was authorised to undertake various acts relating to the proposed sale.
During the course of the transaction, disputes emerged regarding the amount actually paid as advance, the agreed sale consideration, dishonoured cheques, and subsequent communications between the parties. The purchasers claimed they had paid ₹85 lakh and remained willing to complete the sale, while the seller maintained that the buyers had defaulted and that only ₹60 lakh had been received.
The Trial Court refused to grant specific performance but directed refund of ₹85 lakh with interest. On appeal, the Madras High Court reversed that finding and ordered execution of the sale deed after directing the purchasers to deposit the remaining consideration. The seller then approached the Supreme Court.
Supreme Court's Observations
The Supreme Court emphasised that merely proving the existence of a valid agreement is not enough to obtain specific performance. A purchaser must continuously demonstrate financial capacity and willingness to fulfil contractual obligations from the date of the agreement until the final decree.
The Bench examined the evidence and noted that two cheques issued by the purchasers had been dishonoured due to insufficient funds. Although the amounts were later paid in cash, the Court found that this did not establish continuous financial readiness. It also observed that the Memorandum of Understanding relied upon by the purchasers to show availability of funds did not prove that money was actually available at the relevant time.
"The plaintiffs had to show their means, namely availability of funds, and readiness and willingness continuously at all material points of time," the Bench observed while disagreeing with the High Court's approach.
The Court further noted that the purchasers' conduct was inconsistent. It referred to the criminal complaint filed by the purchasers seeking recovery of the advance amount while simultaneously pursuing specific performance in civil proceedings. According to the Bench, this reflected contradictory positions that were relevant while considering an equitable remedy.
"The Trial Court was quite justified in observing that the Plaintiffs were blowing 'hot and cold' about the relief they sought," the judgment stated.
The Court also found inconsistency in the purchasers' stand regarding a subsequent agreement involving a third party, observing that they had taken conflicting positions in separate proceedings concerning assignment of rights under the original agreement.
Equitable Relief Depends on Conduct
Reiterating settled principles under the unamended Specific Relief Act, the Bench explained that specific performance is a discretionary and equitable remedy. Courts are expected to examine the overall conduct of the parties rather than merely determine whether a contract exists.
The Bench observed that even if the purchasers genuinely intended to buy the property, their subsequent conduct including inconsistent pleadings and failure to establish continuous readiness made the case unsuitable for granting equitable relief. The Court also considered the long passage of over two decades since the agreement and the advanced age of the seller while assessing whether enforcement would remain equitable.
Court's Decision
Allowing the appeals, the Supreme Court set aside the Madras High Court's judgment and restored the Trial Court's decree. As a result, the direction for specific performance was cancelled, while the Trial Court's order granting refund of the advance amount with interest remained intact.
The Court also permitted the purchasers to withdraw the ₹1.40 crore deposited pursuant to earlier orders of the High Court and the accrued interest lying in fixed deposit. No order as to costs was passed.
Case Details
Case Title: V.N.A.S. Chandran v. S. Venila and Others
Case Number: Civil Appeal Nos. 7825–7828 of 2013
Judge: Justice Prashant Kumar Mishra and Justice N.V. Anjaria
Decision Date: July 31, 2026
