This article has been written by Arif Mubarak Nadaf pursuing a Diploma in International Contract Negotiation, Drafting and Enforcement from LawSikho.
This article has been edited and published by Shashwat Kaushik.
Table of Contents
Introduction
In the suit for specific performance of the contract, the purchaser has to prove his readiness and willingness in terms of his payment of consideration. The purchaser is bound to show his willingness to complete the sale transaction by tendering the amount of sale consideration. The purchaser has already paid part of the consideration and agreed to pay the balance of the consideration in the time envisaged under the agreement to sale. During the stipulated time and period, the purchaser failed to pay the balance amount of consideration or comply with the other terms and conditions of the agreement to sell. Then the seller has every right to terminate the agreement to sell on account of non-payment of consideration. Then the question remains that if the purchaser has no funds, will it amount to readiness and willingness? We will discuss this in light of below mentioned provisions of the Specific Relief Act of 1963 and citations from the Hon’ble Court. So let’s dive in.
What are readiness and willingness
In a suit for specific performance of the contract, the plaintiff must plead, and prove that he was ready and willing to perform his part of the contract right from the date of the contract up to the date of filing the suit. It is a well established legal principle that ‘readiness’ and ‘willingness’ are matters that have to be proved substantially and not left to mere ceremony and form.
In Sub-Section (c) of Section 16 of the Specific Relief Act, 1963 (1963 Act), which contemplates readiness and willingness. Section 16 of the 1963 Act stipulates the personal right to seek specific relief. The specific performance of the contract cannot be enforced in favour of the person mentioned therein. For the sake of convenience, I hereby extract the relevant portion of Section 16 (c) of the 1963 Act, viz.
Section 16. Personal Bars to Relief
- …
- …
- who fails to aver and prove that he has performed or has always been ready and willing to perform the essential terms of the contract that are to be performed by him, other than terms of the performance of which have been prevented or waived by the defendant.
Explanation- for the purpose of clause (c)-
- where a contract involves the payment of money, it is not essential for the plaintiff to actually tender to the defendant or to deposit in court any money except when so directed by the court;
- the plaintiff must prove the performance of, or readiness and willingness to perform, the contract according to its true construction.
On perusal of the above mentioned provisions, it appears that a person who has failed to aver and prove that he has performed or has always been ready and willing to perform the essential terms and conditions of the contract that were to be performed by him except those terms and conditions that prevented him from performing.
Explanation: I make it clear that, where the contract involves the payment of money as a condition precedent, it is not essential for him to carry money all the time or to deposit the same in court to show his readiness and willingness, except when the court directs him to do so.
Explanation II further makes it clear that it is necessary for a party claiming specific performance to aver and prove that he has been all the time ready and willing to perform his part of the contract.
Besides, in the suit for specific performance, the court has to scrutinise, as contemplated under Order 8 Rule 10 of the Code of Civil Procedure of 1908, the facts set out in the complaint to find out whether all the requirements, in particular those indicated in Section 16 of the 1963 Act regarding readiness and willingness, have been complied with or not.
The doctrine of specific performance
In the context of the specific performance of a contract, readiness and willingness to perform are essential elements that must be demonstrated by both parties. While a party’s willingness to pay for the subject matter of the contract is an important factor, the mere expression of such willingness without actual funds to fulfil the obligation may not be sufficient to establish readiness and willingness under specific performance of a contract.
The doctrine of specific performance is an equitable remedy granted by courts to compel a party to fulfil its contractual obligations when monetary damages are deemed inadequate. For a court to order a specific performance, several conditions must be met, including the demonstration of readiness and willingness to perform by both parties.
Readiness and willingness to perform involve more than just a verbal expression of intent. It requires concrete actions and steps taken by the party seeking specific performance to fulfil their contractual obligations. This may include making arrangements for payment, obtaining necessary approvals or permits, and taking other preparatory measures to ensure that the contract can be performed as agreed.
In cases where a party expresses a willingness to pay but lacks the necessary funds to do so, courts will closely examine the circumstances to determine whether the party’s expression of willingness is genuine and supported by concrete actions. Mere promises or statements of intent, without tangible evidence of financial resources or a realistic plan to obtain the required funds, may not be sufficient to establish readiness and willingness.
Courts may consider factors such as the party’s financial history, creditworthiness, and any efforts made to secure financing or make alternative arrangements to fulfil the contractual obligations. If the court finds that the party lacks the financial means to perform the contract and has not taken reasonable steps to remedy the situation, it may conclude that the party is not genuinely ready and willing to perform.
Specific performance is a discretionary remedy, and courts have the authority to assess the conduct and intentions of the parties involved. If a party’s expression of willingness to pay is deemed insufficient or lacks tangible evidence of financial readiness, the court may decline to grant specific performance and may seek alternative remedies, such as awarding monetary damages or rescission of the contract.
What if the funds are not available
In light of the above mentioned explanation II of Section 16 of the 1963 Act, which makes it clear that the contract in question required payment of money as a condition precedent, it is not essential to carry money all the time or to deposit the same in court to show his readiness and willingness, except when the court directs so.
Facts of readiness and willingness can be gathered or ascertained by the conduct and attending circumstances of the case, like where the plaintiff neither had sufficient funds to pay the consideration amount nor was he acting promptly within the stipulated time, where time was the essence of the contract. In this case, the court held that he was neither ready nor willing to perform his part of the contract.
In one case, the purchaser clearly indicated his readiness and willingness to perform, but the court said that it was not necessary for him to show his possession of money to the court.
In Sukhbir Singh & Ors. vs. Brij Pal Singh & Ors. (1996) the Hon’ble Apex Court held that the law is no doubt and it is not a condition precedent that the respondent should have ready cash with them. The fact that they attended the sub-registrar office to have the sale deed executed and waited for the petitioner to attend the office of sub-registrar is a positive fact to prove that they had the necessary funds to pass on consideration and had with them the needed money for payment at the time of registration. It is not necessary that they always carry the money with them from the date of suit until the date of decree. The Hon’ble Supreme Court further observed that the respondent plaintiff may have been willing to perform his part of the contract; however, it appears that he was not ready with funds and was possibly trying to buy time to discharge his part of the contract.
Recent case laws
In one of the latest judgements rendered by the Hon’ble Supreme Court in P. Daivsingmani vs. S. Sambandan (2022), comprising justices Krishna Murari, Sanjiv Khanna and Bela M. Trivedi.
The plaintiff entered into an agreement to sell with the defendant pertaining to his piece of land for a total consideration of Rs. 650,000/ (consideration). The plaintiff under the agreement paid Rs. 50,000/- as earnest money. The aforesaid parties agreed to complete the sale transaction within a period of 6 months from the date of the agreement. However, the defendant did not comply with the enumerated terms and conditions of the agreement. Thus, the plaintiff had taken follow-up with the defendant in terms of the compliances of the agreement, such as sending a letter, a legal notice through his advocate, and publishing a public notice in the local daily newspaper and thereby cautioned the general public from entering into a transaction with suit property. However, the defendant did not turn up and comply with the agreement. Thus, the plaintiff filed suit against the defendant for specific performance of the agreement. The trial court partly decreed the suit and observed that the plaintiff had failed to prove his readiness and willingness to perform his part of the agreement as the plaintiff had not deposited the balance sale consideration of Rs. 600,000/- in the court at the time of filing the suit. The plaintiff also failed to prove that he had adequate financial strength to pay the sale consideration.
The plaintiff, being dissatisfied and aggrieved with the trial court’s order, preferred an appeal with the High Court. The Hon’ble High Court is pleased to hold that the findings of the trial court as to plaintiff had not proved his readiness and willingness to perform his part of the obligation contemplated under the agreement, which is a perverse finding and is not based on sound reasoning. The Hon’ble High Court held that plaintiff has complied with the requirements contemplated under Section 16 (C) of the 1963 Act by making a specific pleading as to his readiness and willingness.
The defendant impugned the Hon’ble High Court’s order in the Hon’ble Supreme Court. The Hon’ble Supreme Court held that the plaintiff had complied with Section 16 (C) of the 1963 Act and it was the defendant who had failed to perform as per the terms of the agreement, despite the plaintiff’s several letters and legal notice. The Hon’ble Supreme Court observed that the High Court had rightly held that the plaintiff had complied with the requirement of Section 16 (C) of the 1963 Act with regard to readiness and willingness.
Conclusion
In light of the above discussion and rulings of the Supreme Court, it appears that there can be no straight jacket formula about readiness and willingness. It depends on the overall conduct of the parties prior to and subsequent to the filing of the suit. The provisions in the agreement were that the balance was to be paid to the IT Department. The court held that the vendor could not insist that it should be paid to him and if he could not. The vendor could not, on that ground, say that the vendor was not ready and willing. Thus, it is crystal clear what is required most in the suit for specific performance of the contract. The plaintiff must aver or plead and prove his readiness and willingness from the inception until the filing of the suit. It is not necessary to carry cash and deposit it in court to show readiness and willingness. The most important aspect is the conduct of the plaintiff and the circumstances of the case.
References
- (1996)4 SCC 526
- AIR 2015 NOC 338 (P & H)
- (1997) 2 SCC 200: AIR 1996 SC 2510
- https://indiankanoon.org/doc/118013356/
- (2013) 8 SCC 131
