Madras High Court· 28 July 2026
Can a lessee in persistent default of the agreed annual rent claim continuous readiness and willingness under Section 16(c) of the Specific Relief Act, 1963?
Punjab and Sind Bank v. M/s.Dewa properties Ltd
OSA No. 70 of 2026 · OSA No. 70 of 2026
Coram: Justice P. Velmurugan · Justice K. Govindarajan Thilakavadi
Answer
No. Readiness and willingness are not empty formalities and must be evidenced by actual conduct. Where the plaintiff admittedly failed to pay the annual rent which formed the very consideration for continuation of the lease, it cannot assert readiness and willingness; persistent default amounts to a substantial breach of an essential reciprocal obligation. Specific performance being a discretionary equitable relief, an agreement must be enforced as a whole and not selectively, and a party in default cannot invoke the equitable jurisdiction of the Court.
Headnote
Transfer of Property Act, 1882 — s.105 — s.54 — Specific Relief Act, 1963 — s.16(c) — Lease cum sale agreement — Long term lease — Continuous readiness and willingness — Discretionary equitable relief —
Transfer of Property Act, 1882 — s.54 — Lease cum sale agreement — Offer and acceptance does not convey ownership —
Held: An offer and acceptance letter may constitute a binding contract where it contains all essential terms, but does not by itself convert the lessee into a purchaser. Ownership passes only upon fulfilment of the contractual conditions and execution of a valid sale deed. (¶24)
Transfer of Property Act, 1882 — s.105 — Long term lease — A 99 year lease is not a sale —
Held further: A lease, however long its duration, even for 99 years, does not transfer ownership, the lessor retaining the revisionary interest. The nomenclature is not decisive; the substance of the transaction governs. (¶25)
Specific Relief Act, 1963 — s.16(c) — Continuous readiness and willingness — Default in an essential reciprocal obligation —
Held further: Continuous readiness and willingness must be evidenced by actual conduct, and a plaintiff in persistent default of an essential reciprocal obligation cannot assert it. An agreement must be enforced as a whole and not selectively. Appeal dismissed. (¶27, 29, 31)
In the Court's own words
Paragraph 26In the present case, the offer and acceptance letter merely records the consensus between the parties to execute a formal lease cum sale agreement subject to the stipulated terms and conditions, including payment of annual rent. Where execution of the principle agreement is contingent upon compliance with essential conditions, the intending lessee cannot seek enforcement while remaining in breach of those very conditions. The annual rent constituted an essential reciprocal obligation. Failure to perform such obligation disentitles the plaintiff from equitable relief.
Paragraph 27Further, Section 16(c) of the Specific Relief Act, 1963, requires the plaintiff to establish continuous readiness and willingness to perform the essential terms of the contract. Readiness and Willingness are not empty formalities. They must be evidenced by actual conduct. Where the plaintiff admittedly failed to pay annual rent, which formed the very consideration for continuation of the lease, the plaintiff cannot assert readiness and willingness. The Hon'ble Supreme Court in catena of decisions held that continuous readiness and willingness is a condition precedent for grant of specific performance and that it cannot be granted in favour of a party who has failed to perform essential contractual obligations. The plaintiff's persistent default in payment of annual rent amounts to a substantial breach and therefore, cannot compel the defendant to execute the formal lease cum sale agreement. A contract must be performed by both parties according to its terms. In a lease cum sale transaction, payment of annual rent or lease amount is ordinarily an essential obligation of the lessee until the conditions for execution of the sale deed are fulfilled. A party seeking specific performance must prove continuous readiness and willingness to perform his part of the contract. Admittedly, there is no averment in the plaint, that the plaintiff is ready and willing to pay Rs.6000/- per annum as rent. To the contrary, the plaintiff is seeking for an injunction restraining the respondent from inter alia demanding rent.
Paragraph 29Specific performance is a discretionary equitable relief. A plaintiff who has failed to perform his reciprocal obligations is not entitled to invoke the equitable jurisdiction of the Court. The plaintiffs failure to pay the agreed annual rent constitutes a breach of an essential term of the contract. Further, the plaintiff has failed to establish continuous readiness and willingness to perform its obligation and is therefore, not entitled to specific performance. Further, the plaintiff's plea that the offer and acceptance letter and the payment of consideration created an absolute right is legally untenable. An agreement must be enforced as a whole and not selectively. The plaintiff cannot insist upon execution of the lease while simultaneously fail to perform the obligation to pay rent. Payment of annual rent being an essential contractual obligation, persistent default amounts to breach of contract. In disputedly the plaintiff has paid the arrears of rent for 22 years at one shot in the year 2022 in the RCOP proceedings. The specific contention of the defendant is that the plaintiff has paid only Rs.47,39,538.20/- and not Rs.51,39,538.20/- as claimed by the plaintiff. The plaintiff failed to establish that it had paid Rs.51,39,538.20/- as consideration for the sale of the suit property. Moreover, there is no evidence for the balance payment and it is not even avered in the plaint that the plaintiff is always ready and willing to pay the balance. Hence, the plaintiff is not entitled to the execution of the lease cum sale agreement or to an injunction restraining the defendant from dealing with the property.
Acts & Sections
s.16(c) Specific Relief Act, 1963s.105 Transfer of Property Act, 1882s.54 Transfer of Property Act, 1882s.53A Transfer of Property Act, 1882One judgment a day. That's the whole habit.
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