Readiness & Willingness: Plaintiff must prove that he can generate consideration to pay it to the other party

C.S. Venkatesh vs. A.S.C. Murthy (D) by L.Rs. and Ors. (07.02.2026 - SC) : MANU/SC/0142/2020

Case Note:
Contract - Agreement of reconveyance - Specific performance - Plaintiff had filed suit against Defendants for specific performance of agreement of reconveyance in respect of Schedule property and alternatively to declare that sale deed executed by him in favour of Defendants was null and void - Trial court came to conclusion that Plaintiff had failed to prove that he was ready and willing to perform contract, consequently, trial court dismissed suit - Plaintiff filed appeal challenging judgment and decree of trial court - High Court held that sale deed executed by Plaintiff in favour of Defendants was security for loan advanced by Defendants- High Court allowed appeal and defendants were directed to execute deed of reconveyance in respect of Schedule property in favour of Plaintiff - Hence, present appeal - Whether decree of specific performance of agreement of reconveyance passed by Trial Court was rightly set aside by High Court.

Facts:

The Plaintiff had filed the above suit against Defendants for specific performance of the agreement of reconveyance in respect of the Schedule property and alternatively to declare that the sale deed executed by him in favour of the Defendants is null and void. The trial court came to a conclusion that the Plaintiff has established the execution of agreement of reconveyance. The Court also came to a conclusion that the sale deed was not a nominal one, as contended by the Plaintiff. The Court recorded a finding that the Plaintiff had averred in the plaint that there was sufficient plea in relation to readiness and willingness of the Plaintiff to perform his part of the contract. However, it was held that the Plaintiff had failed to prove that he was ready and willing to perform the contract. Consequently, the trial court dismissed the suit. The Plaintiff filed appeal challenging the judgment and decree of trial court. The High Court on consideration of the rival contentions of the parties held that the sale deed executed by the Plaintiff in favour of the Defendants was security for the loan advanced by the Defendants. Consequently, the High Court allowed the appeal. The Defendants were directed to execute a deed of reconveyance in respect of the Schedule property in favour of the Plaintiff.

Held, while allowing the appeal:

(i) Since documents were executed on the same day, the transaction could not be a mortgage by way of conditional sale in view of the express provisions contained in Section 58(c) of the Transfer of Property Act, 1882. A perusal of the recitals contained in the sale deed shows that the property was agreed to be sold absolutely for a total consideration. The Plaintiff had also stated that since possession had already been delivered earlier under a deed of mortgage, delivery of possession under this document did not arise. It was further stated that henceforth neither himself nor his heirs have any right, title or interest in the property and that the Plaintiff is entitled to water, air, right of easement, etc. concerning the property together with all rights, title and interest and right of disposal of the property. The Defendant, his son and grandson, etc. unto posterity were entitled to enjoy the property without any obstruction or trouble either by the Plaintiff or from anyone claiming under him. He had delivered the possession certificate issued by the CITB and Khata certificate for transfer of Khata from City Corporation. Thus, the language employed in this document was plain and unambiguous and the intention of the parties was also very clear from its recitals. Even the evidence led by the parties did not indicate to the contrary. Thus, a careful perusal of all the clauses of the sale deed and the evidence on record would clearly show that the intention of the parties was to make the transaction a sale. Since the execution of the reconveyance deed had already been established, question of holding the sale deed to be nominal could not be accepted. [13]

(ii) The Plaintiff had alleged that he was ready to pay amount to the Defendants and called upon them to execute the reconveyance deed. However, in plaint it was pleaded that the Plaintiff was running contract business wherein he suffered heavy loss and as such he gave up the business. It was also pleaded that at present the Plaintiff had no business or profession and had no source of income. He had no property, either movable or immovable. Mere plea that he was ready to pay the consideration, without any material to substantiate this plea, could not be accepted. It was not necessary for the Plaintiff to produce ready money, but it was mandatory on his part to prove that he had the means to generate the consideration amount. Except the statement of Plaintiff witness, there was absolutely no evidence to show that the Plaintiff had the means to make arrangements for payment of consideration under the reconveyance agreement. [20]

(iii) The deed of re-conveyance, contains a Clause for payment of interest on the consideration amount. However, the Plaintiff had pleaded that there was no agreement to pay the interest. This shows that the Plaintiff was not ready to perform his part of the obligation as per the agreement. Further, the Plaintiff had mortgaged the property with the bank and the bank had obtained an award against the Plaintiff. When the suit property was put up for auction, the Defendants paid the entire amount to the bank which was payable by the Plaintiff under this award. This aspect also indicates the conduct of the Plaintiff. [22]

(iv) Therefore, the trial court had rightly held that the Plaintiff was not ready and willing to perform his part of the contract. The High Court, was not justified in reversing the well-reasoned judgment of the trial court. [23]