Legal Review and Analysis of Annamalai vs Vasanthi and Others 2025 INSC 1267

In-Short

Case: Annamalai vs. Vasanthi and Others, 2025 INSC 1267.

The Supreme Court reiterates the limited scope of a second appeal under Section 100 CPC and holds that acceptance of further payment by a vendor waives the stipulated timeline for performance, making the purchaser entitled to specific performance.

1. Heading of the Judgment

Case Name: Annamalai vs. Vasanthi and Others
Citation: 2025 INSC 1267
Court: Supreme Court of India
Judges: Hon'ble Mr. Justice J.B. Pardiwala and Hon'ble Mr. Justice Manoj Misra
Date of Judgment: October 29, 2025

2. Related Laws and Sections

The judgment primarily involves the interpretation and application of the following legal provisions:

• Specific Relief Act, 1963 (as it stood prior to the 2018 Amendment):
  Section 10: Cases in which specific performance of a contract is enforceable.
  Section 14: Contracts which cannot be specifically enforced.
  Section 20: Discretion of the court to decree specific performance.

• Code of Civil Procedure, 1908 (CPC):
  Section 100: Scope of jurisdiction of a High Court in a Second Appeal. It restricts interference to cases involving a "substantial question of law."

• Indian Contract Act, 1872:
  Section 55: Effect of acceptance of performance at a time other than agreed upon, addressing waiver and forfeiture.

• Indian Evidence Act, 1872:
  Section 114: Court may presume existence of certain facts, including that a common course of business has been followed.

3. Basic Judgment Details

• Originating Suits:
  O.S. No. 73 of 2010: Filed by Annamalai (Appellant) for specific performance of an Agreement for Sale dated 08.01.2010 against Saraswathi (D-1), Dharmalingam (D-2), and Vasanthi (D-3).
  O.S. No. 32 of 2011 (New No. 60 of 2012): Filed by Vasanthi (Respondent) against Annamalai for a declaration of her title and injunction over the same property.

• Trial Court Verdict (15.02.2013): Dismissed Annamalai's suit and decreed Vasanthi's suit.

• First Appellate Court Verdict (14.11.2014): Allowed Annamalai's appeal, decreed his suit for specific performance, and dismissed Vasanthi's suit.

• High Court Verdict (02.02.2018): Allowed the second appeals filed by the respondents, set aside the decree for specific performance, and directed refund of the earnest money.

• Supreme Court Appeal: The present appeals were filed by Annamalai challenging the High Court's judgment.

4. Core Principle and Legal Analysis

Title of Analysis: The Interplay of Fact, Law, and Discretion in Specific Performance Suits

The Central Issues:
The Supreme Court framed and addressed three core issues:
A. The legitimacy of the endorsement for an additional payment and the plaintiff's readiness and willingness.
B. The maintainability of a suit for specific performance without seeking a declaration that the termination of the agreement was invalid.
C. Whether the plaintiff was entitled to the discretionary relief of specific performance.

The Supreme Court's Address and Reasoning:

A. On the Re-appreciation of Evidence and Jurisdictional Limits of a High Court
The Supreme Court strongly criticized the High Court for exceeding its jurisdiction under Section 100 of the CPC. The Court reiterated that a second appeal is not a third trial of facts; the High Court can only interfere with the first appellate court's factual findings if they are perverse, based on no evidence, or arrived at by ignoring material evidence.

The core factual finding by the First Appellate Court was that an endorsement on the back of the registered agreement, acknowledging receipt of an additional sum of ₹1,95,000 by the vendors (D-1 & D-2), was genuine. The vendors had admitted their signatures but claimed they were on a blank paper. The Supreme Court, citing Section 114 of the Indian Evidence Act, held that once the signatures are admitted, a presumption arises that they were made for a valid consideration. The burden to rebut this presumption lay heavily on the vendors, which they failed to discharge.

The High Court, by discarding this well-reasoned factual finding, committed a fundamental error. The Supreme Court held that the First Appellate Court's conclusion on this point was unassailable in a second appeal. Consequently, the acceptance of the additional amount after the initial six-month period signified that the vendors had waived their right to insist on the original timeline and to forfeit the earnest money. This conduct established that the plaintiff, Annamalai, was "ready and willing" to perform his part of the contract.

B. On the Maintainability of the Suit Without a Declaration
The respondents argued that since the vendors had sent a termination notice, Annamalai's suit for specific performance was not maintainable without a prayer to declare that termination as invalid.

The Supreme Court drew a clear distinction. It held that a declaratory relief is essential only when a valid contractual right to terminate exists and is exercised, creating a "cloud" on the plaintiff's rights. However, in this case, by accepting the additional payment after the stipulated period, the vendors had waived their right to terminate on the ground of delay. Furthermore, they had already breached the contract by selling part of the property to Vasanthi (D-3), a related party, even before issuing the termination notice.

Therefore, the termination notice was itself a void act. The Supreme Court ruled that when a contract is wrongfully repudiated, the aggrieved party has the option to treat the contract as subsisting and sue for specific performance directly, without needing a separate declaration. Relying on precedents like A. Kanthamani v. Nasreen Ahmed, (2017) 4 SCC 654, the Court held that the suit was maintainable.

C. On the Exercise of Discretion for Granting Specific Performance
The Supreme Court analyzed the discretionary power of the court under Section 20 of the Specific Relief Act, 1963. It noted that the High Court had refused relief on two grounds: (i) the plaintiff was not ready and willing, and (ii) the plaintiff had set up a false case of being in possession.

The Supreme Court dismantled both grounds. The first ground was rejected as it was based on an erroneous interference with a factual finding. The second ground was rejected because a claim of possession that is not proved is not necessarily a "false" claim made with a dishonest intent. The Court held that in a suit for specific performance, the ultimate relief includes the right to possession, so a bona fide but unproven claim of existing possession is not a sufficient reason to deny the relief, especially when the plaintiff had paid over 90% of the total consideration and the conduct of the defendants was found to be fraudulent.

5. Final Outcome of the Judgment

The Supreme Court allowed the appeals filed by Annamalai. It set aside the impugned judgment and decree of the High Court and restored the judgment and decree passed by the First Appellate Court, thereby granting specific performance of the sale agreement in favour of Annamalai. The Court directed Annamalai to deposit the balance sale consideration of ₹10,000 in the execution court within one month, if not already deposited.

6. MCQs Based on the Judgment

Question 1: In the case of Annamalai vs. Vasanthi & Ors. (2025 INSC 1267), what was the legal significance of the vendors (D-1 & D-2) accepting an additional payment of ₹1,95,000 after the initial six-month period stipulated in the agreement?
a) It converted the agreement into a loan transaction.
b) It constituted a waiver of their right to insist on the original timeline and to forfeit the earnest money.
c) It automatically terminated the original sale agreement.
d) It proved that the plaintiff was attempting to defraud the vendors.

Question 2: The Supreme Court held that the High Court erred in interfering with the First Appellate Court's finding regarding the payment of the additional ₹1,95,000. On what primary legal ground did the Supreme Court base this conclusion?
a) The High Court failed to appreciate the sentimental value of the property.
b) The High Court re-appreciated evidence, which is not permissible under Section 100 CPC when the finding is not perverse.
c) The High Court incorrectly applied the 2018 amendments to the Specific Relief Act.
d) The High Court did not grant adequate time to the parties for arguments.