2020 SCC OnLine SC 143
The plaintiff (A.S.C Murthy) filed a suit against the defendants for Specific performance of the agreement of Reconveyance and alternatively to declare that the sale deed executed by him (plaintiff) was null and void. The plaintiff had taken financial assistance, by executing a deed mortgage, from the defendant. But after that the plaintiff had failed to pay the interest on the sum which was agreed by them. Thus the defendant asked the plaintiff to execute a nominal sale deed in order to ensure prompt payment of interest. Accordingly, the sale deed was executed by him and the defendant was put in the possession of the property without having to pay rent and in return the plaintiff need not to pay interest on the amount advanced by the plaintiff; but 5 years later, the plaintiff demanded the defendant to execute a reconveyance deed.
Decision taken by the Trail Court: The Trial Court dismissed the suit and held that the sale deed executed by him (plaintiff) was not a nominal one. Also, there was sufficient plea in relation to readiness and willingness of the plaintiff to perform his part of the contract but the court held that the plaintiff had failed to prove the same in the court. The Trial Court dismissed the suit by holding that the sale deed executed by the plaintiff was not nominal and that the plaintiff had failed to prove that he was ready and willing to perform the contract for reconveyance.
Decision taken by the High Court: The plaintiff filed appeal challenging the judgment of trial court in the High Court. The Court held that the sale deed executed by the plaintiff in favor of the defendants was security for the loan advanced by the defendants. The High Court allowed the appeal and instead of upholding the judgment of the trial court, the court set aside the judgment and decreed the suit and also directed Defendants to execute a deed of reconveyance in respect of the scheduled property in favor of the plaintiff.
Thus, the Defendants approached the Supreme Court challenging the High Court judgment.
Decision taken by the Supreme Court:
The Apex Court observed that it is mandatory on the part of the Plaintiff in a Specific Performance of Suit to prove that he has means to generate the consideration amount. Unlike the Trial Court, the Supreme Court too observed that the words ‘ready and willing’ imply that the plaintiff was prepared to perform his part of the contract but the plaintiff had failed to prove the same in the court. The Court said “the continuous readiness and willingness on the part of the plaintiff is a condition precedent to grant the relief of performance. Right from the date of execution of the contract till the date of decree, he must prove that he is ready and willing to perform his part of the contract. If the plaintiff fails to either aver or prove the same, he must fail.”
Taking an overall view of the matter, The Court restored well-reasoned judgment of the Trial Court and said that mere plea that plaintiff is ready to pay the consideration, without any material to substantiate this plea cannot be accepted. The plaintiff was not ready and willing to perform his part of the contract. Hence, the judgment of the High Court was set aside and the decree passed by the Trial Court was restored.
Section 3(A) of the Legal Services Authority Act; O.2 R.2 pf CPC, Article 226 of the Constitution of India, Rule 9 of the National Legal Services Authority Rule, 1995
Section 34 and 37 of the Arbitration and Conciliation Act, 1996