Specific Performance Cannot Reward a Buyer Who Blows Hot and Cold: Supreme Court Denies Equitable Relief for Lack of Continuous Financial Readiness, Contradictory Pleadings and Creation of Third-Party Rights

Case Name: V.N.A.S. Chandran v. S. Venila and Others

Date of Judgment: 31 July 2026

Citation: 2026 INSC 776

Bench: Justice Prashant Kumar Mishra and Justice N.V. Anjaria

Held:The Supreme Court held that a purchaser seeking specific performance under the unamended Specific Relief Act must prove continuous readiness and willingness from the agreement until the decree. A demand draft produced years later cannot establish earlier financial capacity, particularly where cheques were dishonoured and no credible evidence of available funds existed. As specific performance was then an equitable and discretionary remedy, it could be denied to purchasers who took contradictory positions, sought refund through criminal proceedings, created third-party rights without title and failed to approach the court with clean hands. The Court also clarified that an unauthorised termination need not be separately challenged where the purchaser sues for specific performance, and a respondent may contest an adverse finding under Order XLI Rule 22 CPC without cross-objections if no additional relief is sought.

Summary:The dispute concerned a 1 April 2004 agreement by which V.N.A.S. Chandran agreed to sell property at Udhagamandalam to S. Venila for ₹2.25 crore. A power of attorney was simultaneously executed in favour of Venila’s husband, V. Sowrirajan, who later entered into a sub-agreement with R.P. Rajan concerning the same property. Several cheques issued towards the consideration were dishonoured, and the parties disputed whether ₹85 lakh or ₹60 lakh had been paid as advance.

After a decree affecting the property was set aside, the vendor demanded payment of the balance, revoked the power of attorney for alleged misuse and terminated the agreement. Venila and Sowrirajan sued for specific performance or refund. The Trial Court found that ₹85 lakh had been paid but refused specific performance because the purchasers had taken inconsistent positions, including seeking recovery of the advance through criminal proceedings while pursuing contractual enforcement. It instead ordered refund with 15% interest and created a charge over the property.

The Madras High Court granted specific performance, relying on a proposed sale of the purchasers’ Chennai properties and a demand draft of ₹1.40 crore produced during the appeal. The Supreme Court reversed, holding that readiness and willingness had to be proved continuously. Dishonoured cheques, lack of available funds, belated reliance on the financing arrangement and sale of the Chennai properties only after filing the suit disproved financial readiness.

The Court also found that the purchasers had adopted contradictory positions regarding the alleged assignment to Rajan and had improperly created third-party rights before acquiring title. Venila could not distance herself from her husband’s conduct, as he had managed the entire transaction and she had neither testified nor disowned his actions. Considering their lack of clean hands, the passage of over two decades and the resulting hardship to the aged vendor, the Court held that specific performance would be inequitable and restored the refund relief.

Decision:The Supreme Court allowed the appeals, set aside the Madras High Court’s decree granting specific performance and restored the Trial Court’s decree awarding refund of ₹85 lakh with 15% annual interest from the date of the suit until realisation, secured by a charge over the property under Section 55(6)(b) of the Transfer of Property Act, 1882. The plaintiffs were also permitted to withdraw the ₹1.40 crore deposited pursuant to the High Court’s decree, along with accrued interest.