Maintainability of Suit for Specific Performance in absence of a prayer of declaratory relief that Termination of Agreement to Sell was illegal

A suit for Specific Performance demands compliance with various mandatory conditions, noncompliance of which, would result in dismissal of the Suit for specific performance. These mandatory conditions are in the nature of Readiness and Willingness of the Plaintiff to perform the contractual obligations, as embodied in Section 16(c) of the Specific Relief Act, 1963 [“the Act”], which the Plaintiff must prove not only up till the filing of the suit for Specific Performance but at all times, from the date of the contract and throughout the pendency of the suit¹. Additionally, the Plaintiff must also be circumspect of the five material questions as expounded upon by the Supreme Court in the matter of Kamal Kumar vs Premlata Joshi² which are required to be gone into before granting the relief of Specific Performance. For a detailed analysis on the essential pleadings and the scope of readiness and willingness for filing a suit for specific performance, refer here.

The scope of this article is confined to the proposition viz. whether a suit for specific performance is maintainable in absence of a prayer of declaratory relief that the termination of the Agreement to sell was bad in law. In a typical case of specific performance, the Plaintiff approaches the court after the Agreement to sell has been terminated by the Defendant, praying for specific performance of the said agreement. In such a case, if the Plaintiff does not seek a declaration to the effect that the termination of the Agreement to Sell by the Defendant was bad in law, in addition to the prayer of specific performance of the said Agreement, would that prove to be fatal to the case of the Plaintiff?

In I.S. Sikandar (D) by LRs vs K. Subramani & Ors.³, the parties entered into an Agreement to Sell dated 25.12.1983 for sale of an immovable property in favour of the Plaintiff. However, despite various opportunities, the Plaintiff failed to pay the balance consideration which constrained the Defendants to terminate the Agreement to Sell vide legal notice dated 28.03.1985. The Plaintiff filed a suit before the Trial Court for specific performance of the Agreement to Sell dated 25.12.1983, without seeking the declaratory relief to the effect that the termination of the Agreement to Sell dated 25.12.1983 by the Defendants was bad in law. In the aforesaid facts and circumstances, the Supreme Court held that in absence of such a prayer, the suit for specific performance filed by the Plaintiff would not be maintainable.

However, subsequently, the Supreme Court in the matter of A. Kanthamani vs Nasren Ahmed⁴, refused to apply the ratio laid down I.S. Sikandar (supra) by observing that law laid down in the aforesaid judgment is confined to the facts of that case only. In Kanthamani (supra) the Plaintiff filed suit before the Trial Court for specific performance of an agreement to sell which was terminated by the Defendant vide letter dated 03.01.1990. The Suit did not contain a prayer for declaratory relief to the effect that the termination of the Agreement to sell was bad in law. The Trial Court decreed the suit for specific performance in favour of the Plaintiff. The Appeal filed by the Defendant before the High Court was also dismissed, confirming the judgment passed by the Trial Court. In appeal before the Supreme Court, the Defendant placed reliance upon I.S. Sikandar (supra) and argued that since the Plaintiff did not seek the declaratory relief, therefore the suit for specific performance would not be maintainable. However, the Supreme Court observed that the aforesaid objection with respect to the maintainability of the suit was not raised by the Defendant in the courts below and only raised for the first time in Appeal before the Supreme Court. In the aforesaid circumstances, the Supreme Court observed that the plea regarding maintainability of suit is required to be raised in the first instance in the pleading (written statement) then only such a plea can be adjudicated by the Trial Court on its merits as a preliminary issue and only thereafter a finding rendered by the Trial court on the said issue can be examined by the first and second appellate courts. Therefore, the Supreme Court dismissed the Appeal and upheld the concurrent findings of the courts below decreeing the suit for specific performance.

Can Appellate Court decide maintainability of Suit dehors the framing of such an issue by Trial Court?

The Supreme Court in Kanthamani (supra) and I.S. Sikandar (supra), are unanimous of the view that in a fact scenario where the vendor unilaterally terminates an Agreement to sell, the vendee who is seeking specific performance of such agreement ought to seek declaratory relief to the effect that the termination of the Agreement was bad in law. However, the Supreme Court in Kanthamani (supra) clarified that an issue must be framed with respect to the maintainability of the suit on such ground, before the court of first instance as it is only when a finding on the issue of maintainability is rendered by trial court that the same can be examined by the appellate courts. In other words, if the maintainability were not an issue before the trial court or the appellate court, a suit cannot be dismissed as not maintainable. It is pertinent to note that in I.S. Sikandar (supra) neither the trial court nor the appellate court had framed the issue as to the maintainability of suit in absence of prayer of declaratory relief. Despite that the Supreme Court emphatically held that a Suit for specific performance simpliciter is not maintainable in absence of a prayer for declaratory relief that termination of the Agreement to sell was bad in law.

In R. Kandasamy vs T.R.K. Saraswathy & Anr.⁵, the Supreme Court was discussing various principles of specific performance when it found itself vexed with the position of law laid down in the aforesaid two cases. The Supreme Court observed that the in Kanthamani (supra) the Court was not addressed on the aspect of ‘Jurisdictional fact’ the existence or nonexistence whereof, would clothe or deprive the court of the jurisdiction to entertain the case. The Supreme Court placed reliance upon Shrishti Dhawan vs Shaw Bros⁶. to explain ‘Jurisdictional fact’, as follows-

“19. *** What, then, is an error in respect of jurisdictional fact? A jurisdictional fact is one on existence or non-existence of which depends assumption or refusal to assume jurisdiction by a court, tribunal or an authority. In Black’s Legal Dictionary it is explained as a fact which must exist before a court can properly assume jurisdiction of a particular case.. ***”

A ‘jurisdictional fact’ has to be discerned from the facts and circumstances of each case. For example, in a suit for specific performance, the fact that the agreement has been terminated by the Defendant becomes a ‘jurisdictional fact’. The Agreement is non-existent pursuant to the termination and if the Plaintiff files a suit for specific performance of the said Agreement without seeking a declaration to the effect that the termination of the agreement was illegal, the suit itself does not have any legs to stand on. Therefore, the Trial Court must first decide whether the ‘jurisdictional fact’ exists i.e. whether the termination of the Agreement was illegal or legal. If the Court decides that the termination was illegal, then the court can proceed to assume jurisdiction to decide whether to grant specific performance. However, if the court arrives at a finding that the termination of the agreement was legal, then the court would be denuded of the power to proceed with the trial of specific performance.

In Kandasamy (supra), the Supreme Court emphasized that it is the bounden duty of the Trial Court to frame the issue touching upon the jurisdictional fact, however, the Supreme Court clarified that the failure of the Trial Court to frame an issue as to the maintainability of the suit touching jurisdictional fact, would not curtail the power of the higher court to examine whether jurisdictional fact did exist for grant of relief of specific performance. As observed by the Supreme Court in Srishti Dhawan (supra) without deciding ‘Jurisdictional fact’ a court cannot assume jurisdiction. The judgment of Supreme Court in Kandasamy (supra), stultifies the ratio laid down in Kanthamani (supra) in which the Court found itself constrained to rule that since the issue with respect to maintainability was not framed by the Trial Court, therefore, the higher court cannot examine the said issue.

The ratio laid down in Kanthamani (supra) and Kandasamy (supra) was subsequently followed by the Supreme Court in the matter of Sangita Sinha vs Bhawna Bhardwaj and Ors⁷. of 2025 wherein the Plaintiff had filed a suit for specific performance without seeking a declaratory relief to the effect that the termination of the Agreement to sell was illegal. The Supreme Court drew sustenance from the ratio laid down in Kandasamy (supra) and observed that the cancellation of the Agreement to Sell by the Defendant was a ‘Jurisdictional fact’ and even though the Trial Court failed to frame an issue touching upon the jurisdictional fact, the higher court would not be denuded of the power to examine the existence of ‘Jurisdictional Fact’. Since the Plaintiff failed to seek a declaratory relief vis-à-vis the Agreement to Sell, the Court held that the suit for specific performance was not maintainable, as follows-

“26. Since in the present case, the seller had issued a letter dated 07th February, 2008 cancelling the agreement to sell prior to the institution of the suit, the same constitutes a jurisdictional fact as till the said cancellation is set aside, the respondent is not entitled to the relief of specific performance.

27. Consequently, this Court is of the opinion that absent a prayer for declaratory relief that termination/cancellation of the agreement is bad in law, a suit for specific performance is not maintainable.” (emphasis supplied)

Exception to the above Rule

Recently, the Supreme Court in the matter of Annamalai vs Vasanthi And Ors.⁸ upheld the above principle that in absence of a prayer for declaration that the cancellation/termination of the Agreement was illegal, a suit for Specific Performance simpliciter would not be maintainable. However, the Supreme Court carved out one exception to the above rule viz. when no right is conferred upon a party to terminate the contract, or the right so conferred is waived, yet the contract is still terminated unilaterally, then such termination may be taken as breach of contract by repudiation and the party aggrieved may, by treating the contract as subsisting, sue for Specific Performance without seeking declaratory relief qua the validity of termination. In the facts and circumstances of the above case the Plaintiff entered into an Agreement to Sell with the Defendants for purchasing the Suit Property. Out of sale consideration of Rs 4,80,000/- , Rs 4,70,000/- were paid by the Plaintiff and the remaining consideration of Rs 10,000/- was required to be paid within six months failing which his earnest money shall be forfeited. However, within the period of six months the Defendants demanded additional payment of 2 lakhs, against which the Plaintiff paid Rs 1,95,000/- to the Defendants, after the expiry of six months. The balance consideration of Rs 10,000/- still remained pending, however, the Defendant did not exercise their right to forfeit the earnest money. On contrary, the Defendants terminated the Contract and sold the subject property to Defendant No.03. In the aforesaid circumstances, the Supreme Court held that the general rule would not apply for the following reasons-

After expiry of six months the Defendants waived their right to forfeit the advance consideration/earnest money.
By acceptance of additional consideration after six months period, the Defendants treated the contract as subsisting.
By selling the suit property to Defendant No.03, the Defendants committed a breach of Contract.

In the aforesaid circumstance, the Supreme Court held that the Plaintiff had an option to treat the contract as subsisting and sue for Specific Performance of the contract, more so when termination was a void act, no longer permissible under the varies contract. Therefore, the Supreme Court held the Suit for Specific Performance was maintainable even without seeking declaration that termination of contract was bad in law.

In K.S. Manjunath and Ors. vs Moorsavirappa Muttana Chennappa Batil, since deceased by his LRs and Ors⁹.The Original Vendors executed an Agreement to Sell dated 28.04.2000 [“ATS”] with respect to the subject land in favour of the Original Vendees for a total consideration of Rs 26,95,501/- out which the original vendees paid an amount of Rs 2 lakh as earnest money. Subsequently a relative of the Original Vendors filed a Suit No. 30 of 2001 inter alia seeking partition and possession of certain properties including the subject land. A Status Quo order came to be passed in the aforesaid Suit. The Original Vendees attempted to enforce their rights under the Agreement to Sell by seeking their impleadment in the aforesaid Suit, however, their application came be dismissed and subsequently, a Writ Petition, challenging the same, also came to be dismissed. Meanwhile, on 10.03.2003 the Original Vendors issued a Notice of Termination, thereby terminating the ATS for the following reasons-

Long pendency of Suit No. 30 of 2001 and the status quo order in force therein;
The death of one of the Original Vendors.

By way of the aforesaid Notice of Termination, the Original Vendors called upon the Original Vendees to take back the earnest money and treat the ATS as cancelled. Thereafter, on 10.02.2007, the relative of the Original Vendors withdrew the Suit No. 30 of 2001 which resulted in vacation of the status quo Order. Pursuant thereto, the Original Vendors executed Sale Deeds dated 20.02.2007 and 02.03.2007, selling the subject land to the subsequent purchasers. In aforesaid circumstances the Original Vendees filed Suit for Specific Performance against the Original Vendors and the subsequent purchasers, without seeking a declaration that the termination of ATS was illegal. The Trial Court dismissed the Suit, which came to be challenged before High Court, which allowed the Appeal and decreed Specific Performance in favour of Original Vendees. This order came to be challenged before the Supreme Court by the Subsequent Purchasers who inter alia took the plea that since the Original Vendees failed to seek declaration, Suit for Specific Performance was not maintainable. Reliance was placed upon I.S. Sikander(supra) and Sangita Sinha (supra).

The Supreme Court, however, refused to place reliance upon the aforesaid case laws as they were distinguishable from the facts of present case. The Court observed that in I.S. Sikander(supra) the purchasers defaulted in performing his part of the contract despite multiple opportunities afforded to him wherein he was called on to pay the balance consideration on various occasions but he failed to do so, which constrained the Vendors to terminate the Agreement. However, in the present case no such opportunity was afforded to the Original Vendees by the Original Vendors. In the present case the termination was unilaterally carried out by the Vendors without any preceding notice and without any opportunity to the Original Vendees to perform their part of Contract. Sangita Sinha (supra) is also distinguishable as in that case the Court held the Suit for Specific Performance to be not maintainable owing to the absence of a declaratory relief, since the vendee’s act of encashing the demand drafts amounted to acceptance of the vendor’s repudiation and having no readiness and willingness to perform the contract, thereby effectively cancelling the Agreement to Sell whereas in the present case the termination was effected by the Original Vendors despite the readiness and willingness of the Original Vendees. The Court therefore, arrived at a finding that a unilateral termination of agreement is impermissible except where the agreement is determinable within the meaning of Section 14 of the Specific Relief Act, 1963. Once such termination is found to be invalid, the ATS continues to remain alive, subsisting and executable. Further, as the law subsists, once the alleged termination of agreement in question is found to be not bonafide and being done in a unilateral manner, no declaration challenging the alleged termination is required.In view of the above peculiar circumstances, the Supreme Court held that the Suit for Specific Performance was maintainable even without a prayer for declaration that the Termination of ATS was illegal.

Therefore, from a perusal of the above judgments, it appears that the the test to be applied in a situation when a Suit for Specific Performance is filed without seeking declaration that termination of the ATS was illegal, is –

Whether the Plaintiff/ Purchaser was ready and willing to perform his part of the Contract.
Whether the Defendant/Vendor afforded opportunities to the Plaintiff/Purchaser to perform his part of the Contract.
Whether the termination of ATS by the Defendant/Vendor was unilateral, without any preceding notice to the Plaintiff/purchaser to perform the contract.

The Court would have to give a finding on the aforesaid issues before concluding whether Suit for Specific Performance can be decreed in absence of a prayer for declaration that the Termination of ATS was illegal.

Conclusion

The existence of a valid Agreement to sell is a sin qua non for grant of relief of specific performance. This is because an agreement, which has been cancelled, would be rendered non-existent in the eyes of law and such a non-existent agreement could not possibly be enforced before a court of law¹⁰. Therefore, it is imperative for the Plaintiff to seek a declaratory relief to the effect that the termination of the Agreement to sell was bad in law, in addition to the prayer of specific performance of the said agreement. Since the termination of the Agreement constitutes ‘jurisdictional fact’ as observed by the Supreme Court in Kandasamy (supra) and Sangita Sinha (supra), merely because the Trial Court failed to frame an issue regarding maintainability of suit touching upon the jurisdictional fact, the higher court would not be denuded of the power to examine the existence of ‘jurisdictional fact’. Assumption of jurisdiction by a particular court depends upon existence of jurisdictional fact¹¹. Therefore, in a suit for specific performance of an Agreement to Sell, the absence of a prayer for declaratory relief to the effect that the termination of the Agreement to Sell was illegal, would prove to be fatal to the case of the Plaintiff. However, there are some exceptions carved out by the Supreme Court in Annamalai (supra) and K.S. Manjunath (supra) wherein owing to the peculiar facts and circumstances, the Supreme Court decreed Suit for Specific Performance even in absence of a prayer for declaratory relief that the termination of ATS was illegal.

By Daksh Pandit