The Supreme Court upheld the decree for specific performance, ruling that a suit for specific performance is maintainable without a declaratory relief against a unilateral termination when the agreement is not determinable in nature. The subsequent purchasers were held not to be bona fide purchasers for value without notice under Section 19(b) of the Specific Relief Act, 1963.
Facts Of The Case:
On 28.04.2000, the original vendors executed an unregistered Agreement to Sell (ATS) in favour of the original vendees for agricultural land in Karnataka. The vendees paid a substantial part of the consideration and performed their obligations, including getting the land converted and tenants relocated. In 2003, the original vendors issued a unilateral termination notice citing pending litigation and the death of a co-vendor, but never refunded the earnest money. The vendees immediately contested this termination. After the pending suit was withdrawn in 2007, the original vendors sold the same land to the appellants (subsequent purchasers). The original vendees then sued for specific performance against both sets of defendants. The Trial Court denied specific performance but awarded a refund. The High Court reversed, decreeing specific performance. The Supreme Court ultimately dismissed the subsequent purchasers’ appeal, holding the termination invalid, the agreement subsisting, and the subsequent purchasers not bona fide, while imposing conditions for final execution.
Procedural History:
The suit for specific performance was initially dismissed by the Trial Court, which instead ordered a refund of the advance payment. On appeal, the High Court reversed this decision and decreed specific performance in favour of the original vendees. The subsequent purchasers then appealed to the Supreme Court by way of Special Leave Petition. The Supreme Court, after hearing the parties, dismissed the appeals and upheld the High Court’s decree for specific performance, albeit with modified financial terms for its execution.
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Court Observation:
The Supreme Court made pivotal observations on three core legal issues. It held that a unilateral termination of a non-determinable agreement is impermissible and does not require the aggrieved party to seek a declaratory relief against it for a specific performance suit to be maintainable. The Court further ruled that the subsequent purchasers were not bona fide purchasers for value without notice, as they had constructive notice of the prior agreement via the termination notice and failed to make requisite inquiries. Finally, it affirmed the original vendees’ continuous readiness and willingness to perform their contractual obligations, a necessary condition for granting the equitable relief of specific performance.
Final Decision & Judgement:
The Supreme Court dismissed the appeals of the subsequent purchasers and upheld the decree for specific performance granted by the High Court. It directed the appellants to execute the sale deed and hand over possession of the suit land to the original vendees. This was conditional upon the vendees paying the balance sale consideration with interest and an additional compensatory amount of ₹5 crores to the appellants within six months, acknowledging the long passage of time since the original breach.
Case Details:
Case Title: K.S. Manjunath & Ors. vs. Moorasavirappa @ Muttanna Chennappa Batil (Deceased) By His LRs & Ors. Citation: 2025 INSC 1298 Appeal Number: Civil Appeal Nos. 13507-13508 of 2025 Date of Judgement: 10th November 2025 Judges/Justice Name: Justice J.B. Pardiwala and Justice R. Mahadevan