Can a High Court in a second appeal under Section 100 CPC interfere with a first appellate court’s factual findings on additional payment and readiness to perform a contract for specific performance?

Summary

Practical Impact

What’s New / What Lawyers Should Note

• High Courts in second appeals under Section 100 CPC cannot disturb first-appellate findings on facts unless they are perverse, ignore relevant evidence, rest on misreading, or rely on inadmissible material.
• Endorsements on the back of registered instruments attract a presumption of genuineness (Sec. 114 IE Act); burden shifts to the party disputing signatures.
• Acceptance of additional payment beyond the agreed period waives the vendor’s right to forfeit earnest money and evidences readiness and willingness to perform.
• A suit for specific performance remains maintainable without a separate declaratory relief when a vendor’s purported termination is void, waived, or constitutes repudiation.
• Time stipulations in property-sale contracts are not automatically “essence”; conduct of parties may extend or waive stipulated deadlines.

Summary of Legal Reasoning

1. Section 100 CPC – Scope of Interference
   • Only permissible on limited grounds (perversity, ignoring evidence, misreading, inadmissibility).
   • High Court wrongly disturbed the first appellate’s acceptance of the ₹1.95 lakhs endorsement.
2. Presumption under Section 114 IE Act
   • Registered-document endorsements are presumed genuine.
   • Once signatures admitted, vendors carry heavy burden to disprove authenticity.
3. Waiver and Section 55 Indian Contract Act
   • Acceptance of late performance (₹1.95 lakhs after six months) waives the right to forfeit and affirms subsistence of contract.
4. Maintainability without Declaratory Relief
   • No contractual clause allowed unilateral termination; endorsement and late payment waived any forfeiture clause.
   • Vendor’s “termination” was void/breach; plaintiff could treat contract as subsisting and sue without seeking a declaration.
5. Discretion under Section 20 Specific Relief Act
   • No inequity or undue hardship on defendants; readiness and willingness proven; related-party sale not bona fide.
   • Grant of specific performance proper in exercise of discretion.

Arguments by the Parties

Petitioner (Appellant – claimant under agreement)

• First-appellate findings on the registered sale agreement, advance payment, additional ₹1.95 lakhs, and readiness/willingness are based on evidence and not perverse.
• Time was not “essence”; over 90% of consideration paid and vendors accepted extra payment, demonstrating waiver and subsistence.
• Vendors waived right to terminate by accepting post-due payment; specific performance should have been granted.

Respondent (Vendors – Saraswathi, Dharmalingam, Vasanthi)

• The agreement was a loan-security, not a bona fide sale contract.
• Endorsement of ₹1.95 lakhs was fabricated; no proof of genuineness.
• Plaintiff failed to serve notice or deposit balance ₹10,000 within six months; not ready and willing.
• Without seeking a declaration that termination was invalid, specific performance suit is not maintainable.

Factual Background

An agreement for sale dated 08.01.2010 was executed in favour of Annamalai for ₹4.8 lakhs, of which ₹4.7 lakhs was paid up-front and ₹10,000 was due within six months. Vendors later demanded ₹2 lakhs extra; Annamalai paid ₹1.95 lakhs, acknowledged by endorsement on 09.06.2010. On 17.08.2010, vendors sold part of the property to Vasanthi (a related party) and purported to terminate the agreement on 20.08.2010. Annamalai sued for specific performance; Vasanthi sued for declaration/injunction. The trial, first-appeal and High Court decisions conflicted on readiness, payment authenticity, and necessity of declaratory relief, leading to this Supreme Court appeal.

Statutory Analysis

• Section 100, Civil Procedure Code: Restricts second-appeal interference to perverse findings, misreading, ignorance of evidence, or reliance on inadmissible material.
• Section 114, Evidence Act: Presumes genuineness of entries in registered instruments, including endorsements.
• Section 55, Indian Contract Act: Late performance acceptance waives “time-essence” breaches if notified.
• Sections 10, 14 & 20, Specific Relief Act, 1963:
  • Sec. 10 — Presumes inadequacy of damages for property contracts; allows specific performance.
  • Sec. 14 — Bars only contracts incapable of definite enforcement or adequate remedy by damages.
  • Sec. 20 — Grants discretionary power to enforce specific performance, guided by equity.

Alert Indicators

• ✔ Precedent Followed
• 🔄 Conflicting Decisions