Specific Performance, Limitation and Readiness in a Delhi Land Sale
On 10 April 2018, Ravi agreed in writing to sell his 200 sq yd plot at Bijwasan, Delhi, to Sunita for ₹95,00,000. She paid ₹12,00,000 as earnest money; the balance was payable by 10 January 2019, when the sale deed was to be registered. Sunita paid ₹8,00,000 more in November 2018 but missed the deadline. On 20 February 2019 Ravi gave her a written extension to 30 June 2019. She failed to pay. On 15 July 2019 Ravi refused to complete and, on 14 November 2019, sold the plot to Tara for ₹1.10 crore, who is in possession. Sunita sent a lawyer's notice on 2 August 2019. Between 2020 and 2021 the parties exchanged emails about a possible 'settlement', but Ravi never admitted owing her anything. Sunita filed a suit for specific performance and injunction on 20 August 2022. Ravi pleads limitation, want of readiness, and bona fide sale to a third party. Sunita has not shown any bank balance or arrangement for the balance consideration.
1. Is the suit for specific performance barred by limitation under Article 54 of the Limitation Act, 1963? Identify the starting point and deal with Sunita's plea that settlement talks continued until 2021.
Read the worked answer
Article 54 gives three years from the date fixed for performance or, if no date is fixed, from notice of refusal. Here the written extension fixed 30 June 2019; refusal was communicated on 15 July 2019; the suit was filed on 20 August 2022. On either starting point, the three-year period expired by July 2022.
The 2020-21 emails do not save the suit. Section 18 requires a clear, signed written acknowledgment of the liability made before the limitation period expires. Talk of a possible 'settlement' is not an admission that Ravi owes the balance or that he will perform the contract. Nor is there any part-payment after 2018 to attract Section 19. Negotiations do not suspend limitation unless the defendant agrees to extend time or makes an acknowledgment satisfying Section 18. A court cannot extend limitation in a suit under Section 5.
The plaint should therefore be dismissed as time-barred. That conclusion is independent of readiness; even if limitation were saved, the Section 16(c) issue would remain.
2. Does Sunita satisfy the requirement of readiness and willingness under Section 16(c) of the Specific Relief Act, 1963? Explain how the court assesses it and the consequence of failure.
Read the worked answer
Section 16(c) requires the plaintiff to plead and prove that she has always been ready and willing to perform the essential terms of the contract. Readiness is financial capacity; willingness is conduct showing a genuine intention to complete. The court looks at the whole course of dealing, not merely a statement in the plaint.
Sunita paid only ₹20,00,000 of ₹95,00,000. She missed the original deadline, accepted an extension, and still failed to pay. She has produced no bank balance, sanction letter, or arrangement for the balance. Her notice of August 2019 demanded performance but did not tender the balance or explain how she would pay it. A plaintiff cannot cure this at the final stage by depositing the balance without a credible explanation for the earlier default.
The requirement is mandatory, not discretionary. If the court finds that Sunita was not continuously ready and willing, the suit must be dismissed even if limitation had been saved and even if Ravi's refusal was unjustified. The court does not grant specific performance as a reward for the defendant's breach where the plaintiff herself was not ready.
3. If specific performance is refused, what is the effect of the sale to Tara, and what monetary relief can Sunita seek regarding the ₹20 lakh already paid?
Read the worked answer
The sale to Tara took place in November 2019, before the suit, so it is not a pendente lite transfer. If specific performance had been decreed, Tara would be bound only if she purchased with notice of Sunita's agreement; Section 19(b) of the Specific Relief Act protects a transferee without notice. A purchaser with notice takes subject to the contract, but the court may still refuse a decree on grounds of hardship. On the present facts, the suit fails on limitation and readiness, so the point does not arise for a decree.
For the money, the plaint should plead refund in the alternative. Of the ₹20,00,000, ₹12,00,000 was expressly earnest money and ₹8,00,000 was later part-payment. On the purchaser's breach, the seller may forfeit reasonable earnest money; ₹12,00,000 is about 12.6% of the price and may be held reasonable, but forfeiture is controlled by Section 74 of the Contract Act. The ₹8,00,000 is an advance towards price, not earnest, and is ordinarily refundable with interest. The court can grant refund even while refusing specific performance.