B. Santoshamma v. D. Sarala

In a modern landmark judgment on property contracts, the Supreme Court held that following the Specific Relief (Amendment) Act, 2018, the grant of specific performance is no longer a discretionary equitable remedy but a statutory obligation of civil courts. The Court further elucidated Section 12 of the Specific Relief Act, 1963, holding that where a vendor enters into an agreement to sell a larger extent of property but turns out to have valid title to only a part thereof, the purchaser is entitled to a decree for specific performance for that part, upon relinquishing all claims to the remaining part and to compensation.

• Specific Performance is a Statutory Mandate: The 2018 amendment to Section 10 eliminated general judicial discretion; courts are now statutorily bound to enforce valid contracts.
• Specific Performance of Part of Contract: Interpreted Section 12(3) to hold that a buyer can enforce the sale of whatever portion of land the vendor actually owns.
• Relinquishment of Balance Claims: Clarified that a buyer seeking part-performance must formally abandon all claims to further performance and damages for deficiency.
• Vendor Cannot Profit from Defective Title: A vendor who contracted to sell property cannot defeat the purchaser's suit by asserting their own lack of title over a portion.
• Readiness and Willingness under Section 16(c): Continuous readiness and willingness proved by prompt issuance of legal notices and deposit of balance consideration.

The appellant entered into an agreement of sale dated 26 November 1984 with the respondent (vendor) to purchase an extent of 540 square yards of land in Secunderabad for a total consideration of Rs. 1,60,000/-, and paid Rs. 25,000/- as earnest advance.

The respondent failed to execute the sale deed, falsely claiming that she only owned 270 square yards and that the remaining 270 square yards belonged to her sister.

The appellant promptly filed a suit for specific performance, offering to pay the full agreed consideration and expressing readiness to take a sale deed for whatever portion the respondent was legally entitled to convey, relinquishing claims for the rest under Section 12(3) of the Specific Relief Act.

The trial court decreed the suit for the entire property. The High Court reversed the decree and limited the relief to refund of advance with interest. The purchaser appealed to the Supreme Court.

After the amendment of the Specific Relief Act by Act 18 of 2018, the grant of specific performance of a contract is no longer purely discretionary. Section 10 now makes it mandatory for the court to enforce specific performance of a contract, subject only to the limited exceptions enumerated in Sections 11(2), 14, and 16. Section 12 of the Specific Relief Act deals with specific performance of part of a contract. Under subsection (3) of Section 12, where a party to a contract is unable to perform the whole of his part of it, the court may, at the suit of the other party, direct the party in default to perform specifically so much of his part of the contract as he can perform, provided the plaintiff pays the agreed consideration and relinquishes all claims to the performance of the remaining part of the contract and all right to compensation. A vendor who has entered into an agreement to sell cannot be heard to say that she has defective title or ownership of only part of the suit property, and on that ground resist the suit for specific performance. The vendor cannot take advantage of her own wrong or defect in title. If the purchaser is willing to accept the part of the property to which the vendor has title upon payment of the agreed consideration without demanding compensation for deficiency, the court is legally bound under Section 12(3) to grant a decree for specific performance for that part. The High Court was wholly in error in denying specific performance.

• Sughar Singh v. Hari Singh (2021) 16 SCC 126: Followed B. Santoshamma on mandatory specific performance post-2018 amendment.
• U.N. Krishnamurthy v. A.M. Krishnamurthy (2022) 13 SCC 534: Discussed the strict proof of readiness and willingness alongside Section 12 principles.
• Shenbagam v. K.K. Rathinavel (2022) 14 SCC 247: Applied B. Santoshamma on equitable balancing of balance sale consideration.