AMICUS AI
Citation Codes
Neutral Citations
2007 INSC 409
Equivalent Citations
citation codes
Case Number
Disposition
Attorney(S)
Judges
Acts
  • Section 16(c) of the Specific Relief Act, 1963
  • The Specific Relief Act, 1963 (in short “the Act”)
  • Section 5, Subsection 2 of the 1983 Income Tax Act
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Cites
Cited by
Citation Codes
Neutral Citations
2007 INSC 409
Equivalent Citations
citation codes
Case Number
Disposition
Attorney(S)
Judges
Acts
  • Section 16(c) of the Specific Relief Act, 1963
  • The Specific Relief Act, 1963 (in short “the Act”)
  • Section 5, Subsection 2 of the 1983 Income Tax Act
Smart Summary

Factual and Procedural Background

Veerappan (first respondent) filed OS No. 247 of 1981 before the Sub-Court, Madurai, seeking specific performance of an agreement for sale dated 23-1-1978. After the trial court decreed the suit, the original defendants, through a power of attorney, sold a large extent of properties—including the suit property—to third parties who are the present appellants. Subsequently:

  • The original defendants (Appellants 1-5) filed AS No. 796 of 1987 in the Madras High Court against the trial court decree.
  • The subsequent purchasers filed CMP No. 3707 of 1989 to be impleaded as Appellants 6-9, alleging possible collusion between the original defendants and Veerappan.
  • A learned Single Judge dismissed CMP No. 3707 of 1989 and allowed CMP No. 4388 of 1990 (withdrawing the power of attorney).
  • The purchasers filed LPA No. 113 of 1990; the Division Bench allowed the LPA on 28-3-1990, impleading them and directing that AS No. 796 of 1987 be heard on merits.
  • During the appeal, the respondents raised a preliminary objection that the defence of “readiness and willingness” under Section 16(c) of the Specific Relief Act, 1963 could not be pressed by the subsequent purchasers. The High Court upheld that objection on 2-11-1999.

The present civil appeal (CA No. 418 of 2001) challenges the High Court’s order restricting the purchasers from raising the defence of readiness and willingness.

Legal Issues Presented

  1. Whether, after a completed conveyance, subsequent purchasers in a suit for specific performance can raise the defence of “readiness and willingness” under Section 16(c) of the Specific Relief Act, 1963.
  2. Whether the High Court rightly confined the appellants’ defence to the question of their status as bona fide purchasers for value without notice.

Arguments of the Parties

Appellants’ Arguments

  • The defence of readiness and willingness remains available because the purchasers “step into the shoes” of their vendors.
  • Relied heavily on the Supreme Court decision in Ram Awadh v. Achhaibar Dubey (2000) 2 SCC 428 to contend that such a defence can be raised in a specific-performance dispute.

Respondents’ Arguments

  • Supported the High Court’s view that, after conveyance, the only relevant enquiry is whether the purchasers are bona fide purchasers for value without notice.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Ram Awadh v. Achhaibar Dubey, (2000) 2 SCC 428 Readiness and willingness is an essential condition for decree of specific performance when the dispute concerns only an agreement to sell. The Court distinguished the precedent, holding it inapplicable because the present dispute involves a completed sale deed; therefore, readiness and willingness are no longer relevant.

Court's Reasoning and Analysis

The Supreme Court observed that the concept of “readiness and willingness” is germane only at the stage when rights flow from an agreement to sell. Once a conveyance is executed, the dispute shifts to whether the transferee is a bona fide purchaser for value without notice.

Applying this principle, the Court reasoned as follows:

  • Section 16(c) of the Specific Relief Act pertains to agreements, not completed sales; hence, its requirements cannot be invoked after conveyance.
  • The appellants, being subsequent purchasers, must instead establish that they purchased the property in good faith for valuable consideration without notice of the prior agreement or decree.
  • Ram Awadh dealt exclusively with an executory contract (no conveyance) and did not consider the legal position post-conveyance; therefore, it does not aid the appellants.
  • Consequently, allowing the purchasers to rely on readiness and willingness would be legally misconceived and irrelevant to the true issue before the appellate court.

Holding and Implications

Appeal Dismissed. The Supreme Court upheld the High Court’s restriction, confirming that the defence of readiness and willingness is not open to the appellants in the circumstances.

Implications: The decision affirms that after a valid conveyance, subsequent purchasers in specific-performance litigation can only contest their liability on the ground of being bona fide purchasers for value without notice; they cannot invoke Section 16(c) defences. The ruling affects only the parties to this litigation and does not create new precedent beyond reinforcing established principles.

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    M.M.S Investments, Madurai And Others v. V. Veerappan And Others

    Dr. Arijit Pasayat, J.—

    CA No. 418 of 2001

    1. This appeal is directed against the judgment of the Madras High Court. Letters patent appeal was filed questioning correctness of the order passed by a learned Single Judge in AS No. 796 of 1987 dated 2-11-1999. The order was passed on a preliminary objection raised by the respondents in the appeal.

    2. Background facts in a nutshell are as follows:

    OS No. 247 of 1981 on the file of the Sub-Court, Madurai was filed by Veerappan, the first respondent for specific performance of an agreement for sale dated 23-1-1978. Respondents 2 to 9 were impleaded in the suit as owners of the property and it was alleged that the owners had entered into an agreement with him and as the agreement was not complied with, the suit was filed. After the decree was passed by the trial court, the defendants through their power of attorney sold large extent of properties including the subject-matter of the suit in favour of certain other persons who are the present appellants. In the meantime, Defendants 1 to 5 filed appeal in AS No. 796 of 1987 before the High Court against the judgment and decree in OS No. 247 of 1981 and the appellants herein being subsequent purchasers filed CMP No. 3707 of 1989 to implead themselves as Appellants 6 to 9 in the appeal on the ground that original Appellants 1 to 5, the erstwhile owners, were trying to collude with the first respondent. Appellants 1 to 5 filed CMP No. 4388 of 1990 to withdraw their power of attorney in favour of one Chakrapani and Sethuraman. A learned Single Judge of the High Court dismissed CMP No. 3707 of 1989 filed by the appellants herein seeking impleadment and allowed CMP No. 4388 of 1990 by order dated 28-6-1990. The appellants filed LPA No. 113 of 1990 against the order of dismissal of CMP No. 3707 of 1989 and also sought for leave to file an appeal against the order allowing CMP No. 4388 of 1990. Both the LPA and CMP No. 9570 of 1990 seeking leave to appeal were disposed of by a common order dated 28-3-1990. LPA No. 113 of 1990 was allowed and with the result the appellants were impleaded as Appellants 6 to 9 in the appeal and AS No. 796 of 1987 was also directed to be disposed of on merits.

    3. The High Court after analysing the rival submissions came to hold as follows:

    “Therefore, we are inclined to hold that having regard to the facts and circumstances of the case, there is no bar for the appellants to raise any issue on the merits of the appeal for consideration in the appeal except the defence of readiness and willingness as provided under Section 16(c) of the Specific Relief Act, 1963.
    In the result, the appeal is ordered accordingly. No costs. Consequently, connected CMP is dismissed.”
    (underlined for emphasis)

    4. Learned counsel for the appellants submitted that the plea relating to readiness and willingness can be raised in a suit for specific performance of contract. Strong reliance is placed on a decision of this Court in Ram Awadh v. Achhaibar Dubey (2000) 2 SCC 428. Learned counsel for the appellants, therefore, has submitted that the High Court was not justified in its view.

    5. Learned counsel for the respondents on the other hand supported the judgment of the High Court.

    6. Questioning the plea of readiness and willingness is a concept relatable to an agreement. After conveyance the question of readiness and willingness is really not relevant. Therefore, the provision of the Specific Relief Act, 1963 (in short “the Act”) is not applicable. It is to be noted that the decision in Ram Awadh case (2000) 2 SCC 428 relates to a case where there was only an agreement. After the conveyance, the only question to be adjudicated is whether the purchaser was a bona fide purchaser for value without notice. In the present case the only issue that can be adjudicated is whether the appellants were bona fide purchasers for value without notice. The question whether the appellants were ready and willing is really of no consequence. In Ram Awadh case (2000) 2 SCC 428 the question of the effect of a completed sale was not there. Therefore, that decision cannot have any application so far as the present case is concerned. Once there is a conveyance the concept would be different and the primary relief could be only cancellation.

    7. Learned counsel for the appellants submitted that since the purchasers step into the shoes of the vendor, the question of readiness and willingness can be pressed into service. This plea is clearly without substance because the purchasers had to prove that they are bona fide purchasers for value without notice. The readiness and willingness aspect will not give any relief to them. That being the position, the appeal is sans merit and is dismissed. There will be no order as to costs.

    CA No. 419 of 2001

    8. In view of the dismissal of CA No. 418 of 2001, no order needs to be passed in this appeal.

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    Comments

    M.M.S Investments, Madurai And Others v. V. Veerappan And Others
    (Apr 11, 2007)