Annamalai v. Vasanthi and Others (Revised)
1. Cause Title
| Element | Detail |
| Case Name | ANNAMALAI v. VASANTHI AND OTHERS |
| Citation | 2025 INSC 1267 |
| Court | Supreme Court of India |
| Appeal No. | Civil Appeal No. of 2025 (Arising out of SLP (C) Nos. 26848-26849/2018) |
2. Head Notes (Legal Principles Applied)
Jurisdiction in Second Appeal (Section 100 CPC): The High Court commits an error of law if it interferes with a finding of fact made by the First Appellate Court, as no substantial question of law arises.
Waiver and Readiness/Willingness: By accepting additional money ($\text{Rs. 1,95,000}$) after the stipulated deadline, the vendors waive the time condition, confirming the purchaser's readiness and willingness.
Bona Fide Purchaser Status: The subsequent purchaser (Vasanthi, D-3) was held not to be a bona fide purchaser due to the close family relationship (D-3 being the daughter of vendor D-1) and presumed knowledge of the prior, subsisting agreement for sale.
Possession Claim: The High Court erred in using the unproven claim of possession by the purchaser as a ground to deny specific performance, as an unproven claim is not equivalent to a false claim made in bad faith.
Discretionary Relief (Section 20, Specific Relief Act): Specific performance must be granted where the vendor's conduct is mala fide (selling property to a relative after receiving over 90% of consideration) and the denial of relief would be arbitrary.
3. Facts of the Case
The appellant, Annamalai, entered into an agreement for sale with Saraswathi (D-1) and Dharmalingam (D-2) on 08.01.2010 for $\text{Rs. 4,80,000}$, paying $\text{Rs. 4,70,000}$ in advance.
Waiver: Annamalai paid an additional $\text{Rs. 1,95,000}$ to the vendors on 09.06.2010, which was endorsed on the agreement.
Breach and Subsequent Sale: The vendors sold a part of the property to Vasanthi (D-3) (D-1's daughter) on 17.08.2010. They issued a termination notice on 20.08.2010.
Litigation History: The High Court ultimately set aside the specific performance decree by finding Annamalai lacked readiness and willingness and by disbelieving the $\text{Rs. 1,95,000}$ payment.
4. Findings of the Apex Court
The Supreme Court overruled the High Court's judgment, confirming the First Appellate Court's findings:
Payment and Readiness: The Court restored the finding that the vendors received the additional $\text{Rs. 1,95,000}$. It ruled that the High Court exceeded its jurisdiction under Section 100 CPC by overturning this finding of fact. This payment confirmed Annamalai's readiness and willingness and established the vendors' waiver of the time clause.
Status of Vasanthi (D-3) - Bona Fide Purchaser: Vasanthi, being the daughter of vendor D-1, was deemed not a bona fide purchaser. The family connection implied presumed knowledge of the prior sale agreement, making the subsequent sale in her favour non-protected. The vendors committed a breach of contract by selling the property to D-3 before terminating the agreement with Annamalai.
Possession Claim: The Court held that the High Court was wrong to use the unproven claim of possession as a ground to deny relief. It reasoned that an unproven claim is not necessarily a false claim that demonstrates unclean hands, and Annamalai's substantial performance (paying over 90% plus the additional amount) far outweighed this technicality. Furthermore, a decree for specific performance would, in any event, entitle him to possession.
Discretionary Relief: The denial of specific performance was found to be arbitrary and not guided by sound judicial principles, given the overwhelming evidence of the vendor's mala fide conduct and the purchaser's substantial performance.
findings of issues :
A. Whether the High Court was justified in interfering with the finding of the first appellate court qua payment of additional amount of $\text{Rs. 1,95,000}$ by the plaintiff-appellant? If receipt of additional payment by D-1 and D-2 is proved, as found by the first appellate court, whether it could be held that plaintiff was not ready and willing to perform its part under the contract?
The Supreme Court found that the High Court was not justified in interfering with the First Appellate Court's finding on this issue, and that the finding conclusively proved the Appellant's readiness and willingness.
Interference in Second Appeal: The High Court erred in law by setting aside the First Appellate Court's finding that the vendors (D-1 and D-2) received the additional $\text{Rs. 1,95,000}$. This was a finding of fact based on the appreciation of evidence (admitted signatures on the endorsement, Exb. A-2), and the High Court exceeded its jurisdiction under Section 100 CPC by overturning it without establishing perversity.
Waiver and Readiness/Willingness: By accepting the $\text{Rs. 1,95,000}$ after the expiry of the six-month deadline stipulated in the agreement, the vendors waived their right to insist on the time limit for the balance $\text{Rs. 10,000}$. This action confirmed the contract was subsisting. As the Appellant had paid over 90% of the original consideration plus the additional demanded amount, his readiness and willingness to perform his part of the contract were unequivocally established.
B. Whether the suit for specific performance was maintainable without seeking a declaration that termination of the agreement was invalid in law?
The Supreme Court found that the suit was maintainable without the declaratory relief.
Termination as a Void Act: The vendors' subsequent termination notice (20.08.2010) was deemed a void act because they had already waived their right to terminate by accepting the additional payment post-deadline (09.06.2010), and had committed a prior breach (selling to D-3 on 17.08.2010).
Declaration Not Essential: A declaratory relief is only essential where a cloud exists on the plaintiff's right, typically when termination is executed under an express contractual right. Since the termination here was a repudiation following a breach, the plaintiff was entitled to treat the contract as subsisting and sue directly for specific performance.
C. Whether in the facts of the case the plaintiff was entitled to the discretionary relief of specific performance?
The Supreme Court found that the plaintiff was entitled to the discretionary relief of specific performance, and the High Court erred in denying it.
Rejection of Grounds to Deny Relief: The Court rejected the High Court's grounds for denying relief:
The claim of additional payment was upheld, negating the finding of "false claim/unclean hands."
The unproven claim of possession was held to be immaterial, as an unproven claim is not equivalent to a deliberately false statement, and the Appellant would be entitled to possession upon receiving the decree anyway.
Vendors' Mala Fide Conduct: The grant of relief was mandated because the vendors acted in bad faith by demanding extra money and then selling the property to D-3 (Vasanthi), who, as D-1's daughter, was not a bona fide purchaser without knowledge of the prior agreement.
Conclusion: Given the Appellant's substantial performance (payment of over 90%) and the vendors' clear mala fides, this was a case where denying the equitable relief of specific performance would be arbitrary.
5. Relief Granted
The Supreme Court ALLOWED the appeals by Annamalai and issued the following order:
The Judgment and Decree of the High Court was SET ASIDE.
The Judgment and Decree of the First Appellate Court (granting specific performance) was RESTORED.
The Appellant, Annamalai, was directed to deposit the remaining balance amount of Rs. 10,000 in the execution court within a period of one month.
The parties were directed to bear their own costs.
