/2022 INSC 0965/
NON­REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.  8050­8051 OF 2022
V.S. Ramakrishnan               …Appellant(s)
Versus
P.M. Muhammed Ali        …Respondent(s)
J U D G M E N T
M.R. SHAH, J.
1. Feeling   aggrieved   and   dissatisfied   with   the   impugned
common judgment and order  dated 21.02.2022 passed by
the   High   Court   of   Kerala   at   Ernakulam   in   Regular   First
Appeal Nos. 686/2010 and 766/2010, by which, the High
Court   has   dismissed   RFA   No.   766/2010   preferred   by   the
appellant herein – original plaintiff and has partly allowed
RFA No. 686/2010 preferred by the original defendant with
respect to the proportionate cost, the original plaintiff has
preferred the present appeals.     
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2. That   the   respondent   herein   –   original   defendant   entered
into   an   agreement   to   sell   with   the   appellant   –   original
plaintiff on 13.07.2005 for a consideration of Rs. 52,500/­
per cent with respect to the property ad­measuring 9 acres
47.41 cents in Re­Survey No. 35/2/1 of Karukutty Village.
Under the said agreement to sell a sum of Rs. 1 crore was
paid   by   the   appellant   to   the   defendant   towards   earnest
money of which Rs. 65 lakhs were paid in cash and Rs. 35
lakhs   were   in   the   form   of   post­dated   cheque   dated
25.08.2005.  As  per  the  terms  of  the   agreement  to  sell the
last   date   fixed   for   payment   of   the   balance   sale
consideration   was   12.01.2006.   The   post­dated   cheque   of
Rs.   35   lakhs   deposited   by   the   defendant   came   to   be
dishonoured/returned   for   the   reasons   “payment   stopped
by   attachment   order”.   At   this   stage,   it   is   required   to   be
noted that  there  was a  raid  conducted by  the  Income  Tax
Department and the bank account of which the post­dated
cheque of Rs. 35 lakhs, was drawn came to be attached by
the IT Department. The cheque was returned by the bank
vide   return   memo   dated   31.08.2005.   The   defendant
through   his   advocate   served   a   notice   upon   the   plaintiff
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drawing   the   attention   of   the   plaintiff   with   respect   to   the
return/dishonour   of   the   post­dated   cheque   vide   notice
dated   02.09.2005.   According   to   the   plaintiff   immediately
the same was replied on 20.09.2005 and offered to pay the
amount   of   Rs.   35   lakhs   in   cash   which   according   to   the
plaintiff   the   defendant   refused   to   accept   the   same.   The
defendant   was   also   called   upon   to   accept   Rs.   35   lakhs   in
cash and the plaintiff was prepared to handover cash. That
thereafter   vide   notice   dated   23.09.2005   the   defendant
terminated the agreement to sell/contract and forfeited Rs.
10   lakhs   and   called   upon   the   plaintiff   to   take   back   an
amount   of   Rs.  55   lakhs.   That   thereafter   vide   notice  dated
18.10.2005   the   plaintiff   replied   to   the   termination   notice
dated 23.09.2005 and called upon the defendant to accept
the   balance   sale   consideration   within   the   agreed   period
i.e.,   on   or   before   12.01.2006.   That   thereafter   the   plaintiff
served a legal notice dated 03.01.2006 and called upon the
defendant to execute the sale deed after accepting balance
sale   consideration.   The   defendant   was   called   upon   to
inform   the   plaintiff   the   date   on   which   he   has   to   pay   the
balance sale consideration and to execute the sale deed. As
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the   defendant   failed   to   act   as   per   the   legal   notice   dated
03.01.2006.   The   appellant   –   original   plaintiff   instituted   a
suit before the learned Trial Court for specific performance
of agreement to sell dated 13.07.2005. The defendant filed
the   written   statement   repudiating   the   contract.   The
learned Trial Court framed the following issues: ­
“1.  Whether   the   plaintiff   is   entitled   to   a   decree   of
specific performance as sought for? 
2.  Whether   the   plaintiff   is   entitled   to   return   of
advance paid and if so its quantum? 
3.  Reliefs and costs.” 
2.1 It   was   the   case   on   behalf   of   the   defendant   that   as   there
was a default on the part of the plaintiff, not acting as per
the   terms   and   conditions   of   the   agreement   to   sell   as   the
balance amount of Rs. 35 lakhs was not paid as the post­
dated   cheque   dated   25.08.2005   was   returned   and
therefore,   the   defendant   was   justified   in   terminating   the
contract. The defendant also denied receipt of the reply to
the  notice dated 23.09.2005. Both, plaintiff as well as the
defendant   led   the   evidence   both,   documentary   as   well   as
oral. The plaintiff also  produced on record the  income tax
returns   for   the   relevant   periods.   The   plaintiff   also
produced   on   record   the   statements   of   bank   accounts   (A­
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12) of himself as well as of related persons. That thereafter
the   learned   Trial   Court   dismissed   the   suit   qua   the   relief
sought for  specific performance of agreement to sell dated
13.07.2005   by   observing   that   the   plaintiff   was   never   in
possession   of   the   balance   consideration   of   about   Rs.   3
crores and 9 lakhs and therefore, it can be said that there
was   no   readiness   and   willingness   on   the   part   of   the
plaintiff. However, the learned Trial Court granted a partial
decree   of   return   of   the   advance   i.e.,   Rs.   65   lakhs   with
interest   of   6%   per   annum   from   13.07.2005   till   realization
and also his proportionate cost of the suit.
2.2 Feeling   aggrieved   and   dissatisfied   with   the   judgment   and
order   passed   by   the   learned   Trial   Court   refusing   to   pass
the decree of specific performance of the agreement to sell
dated   13.07.2005,   the   plaintiff   preferred   RFA   No.
766/2010  before  the  High  Court.  The  defendant  also  filed
RFA   No.   686/2010   challenging   the   order   of   cost   imposed
by   the   learned   Trial   Court.   By   the   impugned   common
judgment   and   order   the   High   Court   has   dismissed   the
appeal   preferred   by   the   appellant   –   original   plaintiff   and
has   allowed   the   appeal   preferred   by   the   defendant   by
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observing   that   as   the   post­dated   cheque   of   Rs.   35   lakhs
which   was   paid   towards   part   sale   consideration   was
returned   therefore   full   payment   towards   part   sale
consideration   was   not   made   and   therefore   there   was   no
concluded contract between the parties for sale of the suit
property.   By   observing   so,   thereafter   the   High   Court   has
observed   once   there   was   no   concluded   contract   between
the   parties   for   sale   of   the   suit   property,   the   question
whether there was readiness and willingness on the part of
the plaintiff to pay the balance sale consideration does not
arise for consideration. 
2.3 Feeling   aggrieved   and   dissatisfied   with   the   impugned
common judgment and order passed by the High Court the
plaintiff has preferred the present appeals. 
3. We   have   heard   Shri   V.   Chitambaresh   learned   Senior
Advocate   appearing   on   behalf   of   the   appellant   and   Shri
Joseph Kodianthara learned Senior Advocate appearing on
behalf   of   the   defendant.   We   have   also   gone   through   and
considered the findings recorded by the learned Trial Court
as well as the High Court. 
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4. The   High   Court   has   non­suited   the   appellant   –   original
plaintiff   on   the   ground   that   as   the   post­dated   cheque   of
Rs.   35   lakhs   was   returned   which   was   towards   part   sale
consideration   and   tendering   the   worthless   post­dated
cheque   cannot   be   said   to   be   tendering   the   payment   and
therefore,   there   was   no   concluded   contract   between   the
parties. By observing so, the High Court has refused to go
into the aspect of the readiness and willingness on the part
of  the  plaintiff. However, it is required to  be noted that  at
the  time when  the post­dated cheque of Rs. 35 lakhs was
tendered the same cannot be said to be worthless cheque.
The   post­dated   cheque   of   Rs.   35   lakhs   returned   by   the
bank   was   with   an   endorsement   i.e.,   “payment   stopped   by
attachment order” as there was a raid conducted by the IT
Department   and   the   bank   account   was   attached   and
therefore,   the   post­dated   cheque   was   returned.   At   this
stage,   it   is   required   to   be   noted   that   the   cheque   was   not
returned   for   the  reasons  of  insufficient   funds   in   the   bank
account.   Therefore,   the   observation   made   by   the   High
Court   that   the   post­dated   cheque   was   worthless   cheque
and tendering such worthless cheque cannot be said to be
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a   payment   towards   part   sale   consideration   cannot   be
accepted. We do not approve such observations/reasoning
given by the High Court. 
4.1 Now   the   findings   and   the   reasoning   given   by   the   learned
Trial   Court   refusing   to   pass   a   decree   for   specific
performance is concerned it appears that though there was
no   specific   issue   framed   by   the   learned   Trial   Court   on
readiness   and   willingness   on   the   part   of   the   plaintiff,   the
Trial   Court   has   given   the   findings   on   the   same   and   has
non­suited the plaintiff by observing  that the plaintiff was
not   having   sufficient   funds   to   make   the   full   balance
consideration   on   or   before   12.01.2006.   Such   a   finding
could   not   have   been   given   by   the   learned   Trial   Court
without putting the plaintiff to notice and without framing
a   specific   issue   on   the   readiness   and   willingness   on   the
part of the plaintiff. There must be a specific issue framed
on readiness and willingness on the part of the plaintiff in
a   suit   for   specific   performance   and   before   giving   any
specific   finding,   the   parties   must   be   put   to   notice.   The
object   and   purpose   of   framing   the   issue   is   so   that   the
parties   to   the   suit   can   lead   the   specific   evidence   on   the
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same.   On   the   aforesaid   ground   the   judgment   and   order
passed by the learned Trial Court dismissing the suit and
refusing to pass the decree for specific performance of the
agreement to sell confirmed by the High Court deserves to
be   quashed   and   set   aside   and   the   matter   is   to   be
remanded   to   the   learned   Trial   Court   to   frame   the   specific
issue with respect to the readiness and willingness on the
part of the plaintiff. On remand the parties be permitted to
lead the evidence on the readiness and willingness on the
part   of   the   plaintiff   to   perform   his   part   of   the   contract,
more   particularly,   whether   the   plaintiff   was   ready   and
willing   to   pay   the   full   consideration   and   whether   the
plaintiff   was   having   sufficient   funds   and/or   could   have
managed the balance sale consideration.  
   
5. In   view   of  the   above   and  for  the  reasons   stated  above  the
present   appeals   succeed   in   part.   The   impugned   common
judgment   and   order   passed   by   the   High   Court   and   the
judgment   and   decree   passed   by   the   learned   Trial   Court
dismissing   the   suit   preferred   by   the   plaintiff   for   specific
performance   of   the   agreement   to   sell   are   hereby   quashed
and   set   aside.   The   matter   is   remitted   back   to   the   learned
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Trial   Court   to   decide   and   dispose   of   the   suit   afresh   in
accordance   with   law   and   on   merits.   The   learned   Trial
Court   is   directed   to   frame   the   specific   issue   on   the
readiness   and   willingness   on   the   part   of   the   plaintiff   to
perform his part of the contract and thereafter, the parties
may   be   permitted   to   lead   the   evidence   on   readiness   and
willingness   on   the   part   of  the   plaintiff   to   perform   his  part
of   the   contract   and   thereafter,   the   learned   Trial   Court   to
decide and dispose of the suit on merits and on the basis
of the evidence that may be led. The aforesaid exercise be
completed   by   the   learned   Trial   Court   on   remand   within   a
period   of   twelve   months   from   the   date   of   receipt   of   the
present order. Both, these appeals are accordingly allowed
to   the   aforesaid   extent.   In   the   facts   and   circumstance   of
the case there shall be no order as to costs.
………………………………….J.
[M.R. SHAH]
NEW DELHI; ………………………………….J.
NOVEMBER 09, 2022 [M.M. SUNDRESH]
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