Supreme Court Asserts Strict Adherence to Payment Timelines in Sale Agreements; Rejects Specific Performance Appeal

In a recent landmark decision, the Supreme Court emphasized the critical importance of adhering to stipulated payment timelines in sale agreements. The ruling, which overturned judgments from both the High Court and the First Appellate Court, clarifies that if a buyer fails to comply with the specified timeframe for payment in an agreement to sell, seeking specific performance of the sale deed is not a viable remedy.

The Bench of Justices Vikram Nath and Ahsanuddin Amanullah, in their discerning analysis, highlighted that the onus of paying the entire balance within six months existed as per the contract. The respondents, in this case, failed to demonstrate any offer or willingness to pay the remaining amount before the expiration of the stipulated six-month period.

The case involved appellants who entered into a registered Agreement of Sale in 1990, fixing a six-month timeframe for the completion of the transaction. Despite the appellants executing a Sale Deed with another party in the interim, the respondents sent a notice in 1997, leading to a legal battle for specific performance, damages, and money recovery.

The Court, after careful examination of the agreement, highlighted that only Rs. 7,000 out of Rs. 21,000 had been paid within the specified time. Rejecting the argument that the indicated time frame had been relaxed, the Court emphasized that the conduct of the parties, especially the appellants, indicated that time remained the essence of the contract.

Notably, the Court dismissed the notion that later payments by the respondents could alter the situation, emphasizing that the lack of willingness to pay the remaining amount or execute the Sale Deed within the specified timeframe prevented the respondents from seeking relief under the 1963 Act.

Citing a precedent in the case of K.S. Vidyanadam v Vairavan, the Court concluded that decisions related to the conduct of parties were irrelevant in this context. Ultimately, the Supreme Court set aside the judgments of the High Court and the First Appellate Court, reinstating the order of the Trial Court.

The Appeals in the case of Alagammal and Ors. v. Ganesan and Anr. have been allowed accordingly.

 

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