Clean Hands and Continuous Readiness Are Indispensable: Inconsistent Refund Claims and Third-Party Dealings Can Defeat Specific Performance
1. Introduction
In V.N.A.S. Chandran v. Mrs. S. Venilla and Ors., 2026 INSC 776, the Supreme Court of India considered whether purchasers under an agreement to sell were entitled to the equitable relief of specific performance despite disputed readiness and willingness, dishonoured cheques, inconsistent pleadings, and a criminal complaint seeking recovery of the advance amount.
The appellant, V.N.A.S. Chandran, was the owner of valuable immovable property at Udhagamandalam. He entered into an agreement to sell the property to respondent no. 1, S. Venilla, for a recorded sale consideration of ₹2.25 crore. Her husband, respondent no. 2, was given a power of attorney to deal with the property. Disputes arose over the amount paid as advance, the validity of termination, readiness and willingness, and an onward agreement allegedly entered into with respondent no. 6.
The Trial Court refused specific performance but granted refund of ₹85 lakh with interest and a statutory charge on the property. The Madras High Court reversed this and decreed specific performance. The Supreme Court restored the Trial Court’s decree.
2. Summary of the Judgment
- The Supreme Court allowed the civil appeals filed by the vendor, V.N.A.S. Chandran.
- The High Court’s decree granting specific performance was set aside.
- The Trial Court’s decree for refund of ₹85,00,000 with interest at 15% per annum and charge over the suit property was restored.
- The Court held that the plaintiffs failed to establish continuous readiness and willingness to perform the contract.
- The Court also held that their conduct was inconsistent and inequitable, particularly because they had sought recovery of the advance amount in a criminal complaint while simultaneously pursuing specific performance.
- The Court clarified that a separate declaratory relief challenging unilateral termination was not necessary where the contract did not confer a contractual right of unilateral termination.
3. Analysis
A. Precedents Cited and Their Role
This precedent was used to affirm that a respondent in an appeal may support the decree of the lower court by challenging an adverse finding without filing cross-objections, so long as no additional relief is sought. Applying this, the Supreme Court held that the vendor could challenge the Trial Court’s finding on readiness and willingness without filing cross-objections because he only wanted to sustain the refusal of specific performance.
This case was central to the issue of whether the plaintiffs were required to seek a declaration that the termination of the agreement was invalid. The Supreme Court relied on it to hold that where the contract does not confer a right of unilateral termination, such termination may be treated as repudiation. In such a case, the aggrieved party can sue for specific performance without separately seeking a declaration that the termination is invalid.
I.S. Sikandar (D) By LRs. & Ors v. K. Subramani & Ors.
The appellant relied on this case to argue that once an agreement is cancelled, a suit for specific performance is not maintainable unless cancellation is specifically challenged. The Supreme Court distinguished this line of reasoning by applying the more nuanced rule from later cases: the need for declaratory relief depends on the nature of the termination and the terms of the contract.
R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr.
This case reconciled earlier authorities on the need for declaratory relief after cancellation of an agreement. It clarified that if maintainability was not properly framed and tried as an issue, a suit cannot later be dismissed solely on that ground. The Court used this precedent to reject the appellant’s maintainability objection.
This case was referred to through the discussion in R. Kandasamy. It supported the proposition that procedural fairness requires the issue of maintainability to be framed and decided at the trial stage before it can be used to defeat the suit at the appellate stage.
Janardan Das and Others v. Durga Prasad Agarwalla and Others
This case was cited for the principle that a plaintiff seeking specific performance must show continuous readiness and willingness. Mere assertion is insufficient; the plaintiff must act diligently and take effective steps to perform contractual obligations.
This was one of the most important authorities. The Supreme Court reiterated that continuous readiness and willingness is a condition precedent for specific performance. The plaintiff must prove that the required funds were available from the date of agreement until the decree. Applying this, the Court held that producing a demand draft years later at the appellate stage did not prove continuous financial capacity.
This precedent reaffirmed that under the unamended Specific Relief Act, 1963, specific performance was discretionary. The court must consider the totality of circumstances, conduct of parties, recitals in the agreement, and surrounding facts.
Sardar Singh v. Smt. Krishna Devi & Anr.
This case was referred to within the discussion of discretionary relief. It supported the approach that courts must consider the parties’ conduct and respective interests before granting or refusing specific performance.
This decision listed the core questions in a suit for specific performance: existence of a valid contract, readiness and willingness, actual performance by the plaintiff, equity and hardship, and alternative relief. The Supreme Court used this framework to assess whether specific performance would be equitable in the present case.
Major Gen. Darshan Singh (D) By LRs & Anr. v. Brij Bhushan Chaudhary (D) By LRs
This case was cited for the maxim that a person seeking equity must do equity. The Supreme Court used it to emphasize that the plaintiffs’ conduct was highly relevant because specific performance is an equitable remedy.
This precedent supported the appellant’s argument regarding the evidentiary significance of the plaintiff not entering the witness box. Since plaintiff no. 1 did not testify and did not disown her husband’s conduct, the Court held that she could not distance herself from the inconsistent stand taken by plaintiff no. 2.
This case was also cited in connection with the consequences of a party not personally entering the witness box and attempting to rely on another person’s conduct or evidence. It reinforced the Court’s conclusion that plaintiff no. 1 could not avoid the legal effect of her husband’s actions.
Muddam Raju Yadav v. B. Raja Shanker (D) Through LRs & Ors.
This recent authority was relied upon to stress that even slight doubt about the plaintiff’s bona fides may justify refusal of specific performance. The Court applied this principle to the plaintiffs’ inconsistent positions, non-disclosure, and conduct involving the sub-agreement with a third party.
This case was cited for the principle that long lapse of time is a relevant factor against granting specific performance. Here, more than two decades had passed since the agreement to sell, the vendor was of advanced age, and plaintiff no. 2 had died. These circumstances made specific performance inequitable.
B. Legal Reasoning
1. Suit maintainable without declaratory relief
The Supreme Court rejected the argument that the plaintiffs’ suit was defective because they had not sought a declaration that the termination of the agreement was invalid. Since the agreement did not give the vendor an express contractual right to terminate unilaterally, the termination could be treated as repudiation. The plaintiffs were therefore entitled to treat the contract as subsisting and sue for specific performance.
2. Readiness and willingness not proved
The Court held that the plaintiffs failed to prove continuous readiness and willingness. Several facts weighed against them:
- Two cheques issued by the plaintiffs were dishonoured for insufficient funds.
- The alleged memorandum of understanding to sell other properties was not mentioned in the reply notice or plaint.
- The sale under that memorandum occurred only in May 2006, after the suit was filed in September 2005.
- The production of a demand draft in 2011 did not prove that funds were available continuously from 2004 onward.
3. Plaintiffs’ conduct was inconsistent
The Court found that the plaintiffs had adopted contradictory positions. In one context, they claimed that rights under the agreement had been assigned or validly passed to respondent no. 6 through the sub-agreement. In the present suit, however, they claimed that plaintiff no. 1 alone retained the right to seek specific performance.
The criminal complaint filed by plaintiff no. 2 seeking recovery of ₹85 lakh also undermined their plea for specific performance. The Court held that a party cannot simultaneously pursue inconsistent remedies in a manner that amounts to “blowing hot and cold.”
4. Equitable discretion under the unamended Specific Relief Act
Since the case arose under the unamended Specific Relief Act, 1963, the grant of specific performance was discretionary. The Court held that the plaintiffs’ conduct, lack of proven financial readiness, and creation of third-party complications disentitled them to this equitable relief.
5. Long lapse of time and hardship
More than twenty years had passed since the agreement. The vendor was of advanced age, and one of the original plaintiffs had died. The Court held that compelling transfer of the property after such a long period would be inequitable.
C. Impact of the Judgment
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Stricter proof of readiness and willingness: Plaintiffs in specific performance suits must prove actual and continuous financial capacity, not merely produce funds at a later stage.
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Conduct remains critical: Even where a valid agreement exists, inconsistent conduct can defeat specific performance.
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Criminal complaints may affect civil relief: A complaint seeking recovery of advance money may be treated as inconsistent with a claim for specific performance, depending on facts.
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No automatic need for declaration after unilateral termination: If the contract does not authorize unilateral termination, a plaintiff may sue for specific performance without seeking a separate declaration.
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Appellate procedure clarified: A respondent may challenge adverse findings without cross-objections if only supporting the decree and not seeking additional relief.
4. Complex Concepts Simplified
Specific Performance
Specific performance is a court order compelling a party to perform the contract, such as executing a sale deed. It is often sought in property transactions because each immovable property is considered unique.
Readiness and Willingness
“Readiness” means financial capacity to perform the contract. “Willingness” means the genuine intention to complete the transaction. Both must exist continuously from the agreement until the decree.
Clean Hands
A party seeking equitable relief must act fairly and honestly. If the party takes contradictory stands, suppresses facts, or misuses legal proceedings, the court may refuse relief.
Declaratory Relief
A declaration is a court statement that a legal position is valid or invalid. Here, the Court held that no separate declaration against termination was needed because the contract did not give the vendor a unilateral termination right.
Power of Attorney
A power of attorney authorizes one person to act on behalf of another. Plaintiff no. 2 had such authority, but his use of it to enter into an onward agreement became a major factor against the plaintiffs.
Charge under Section 55(6)(b) of the Transfer of Property Act, 1882
When a buyer has paid money toward a sale and the sale does not go through, the buyer may have a charge over the property for refund of the amount, depending on the circumstances. The Trial Court granted such a charge for the refund amount.
5. Conclusion
The Supreme Court’s decision reinforces that specific performance is not granted merely because an agreement to sell exists. The plaintiff must prove continuous readiness and willingness and must approach the court with clean hands.
The key takeaway is that inconsistent conduct—such as seeking recovery of advance money in criminal proceedings while also demanding specific performance, or creating third-party complications before acquiring title—can defeat equitable relief. The judgment is significant for property sale disputes, especially those governed by the pre-2018 discretionary regime of the Specific Relief Act, 1963.