Latest Supreme Court Judgments on Specific Performance of Contracts (2023–2025)

Abstract

The specific performance of contracts remains a pivotal and evolving area of civil law, balancing the equitable discretion of courts with the sanctity of contractual obligations. Between 2023 and 2025, the Supreme Court of India has delivered a series of landmark judgments that have significantly refined, reinterpreted, and reaffirmed the principles governing the grant of this discretionary remedy under the Specific Relief Act, 1963, and its transformative 2018 amendment. This article provides a comprehensive analysis of these recent rulings, examining the judicial trajectory on critical issues such as the enforceability of contracts contingent on third-party permissions, the heightened scrutiny of readiness and willingness, the implications of the amendment on the "exceptional circumstances" doctrine, and the nuanced approach towards development agreements, family settlements, and contracts involving uncertainty. The analysis reveals a judicial ethos that increasingly views specific performance as a rule, rather than an exception, while simultaneously erecting robust procedural and substantive safeguards against its misuse. The Court has emphatically underscored that the remedy is not a matter of right but an equitable discretion, demanding utmost good faith and demonstrable preparedness from the plaintiff. These judgments collectively shape a more predictable, yet demanding, legal landscape for parties seeking to enforce contracts in specie, emphasizing that the path to specific performance is paved with clear terms, continuous diligence, and untainted conduct.

Introduction

The remedy of specific performance, rooted in the equitable maxim that "equity regards as done that which ought to be done," occupies a unique space in contract law. It moves beyond mere monetary compensation (damages) to compel the actual execution of the contracted promise, thereby preserving the unique value or position a contracting party bargained for. In India, this remedy is primarily governed by the Specific Relief Act, 1963. For decades, the judicial approach was circumscribed by Section 10 of the unamended Act, which positioned specific performance as a discretionary remedy grantable only when monetary compensation was "inadequate." This fostered a jurisprudence where denial was common, and plaintiffs faced an uphill battle.

The legislative watershed came with the Specific Relief (Amendment) Act, 2018, which fundamentally altered this paradigm. It introduced a presumption in favour of specific performance for contracts concerning immovable property (via an explanation to Section 10), thereby signalling a shift from damages being the primary remedy. Crucially, it added Sections 14(3) and 14(4), making contracts for infrastructure projects and Public-Private Partnerships (PPPs) categorically non-specifically enforceable, and introduced Section 20A to mandate expeditious disposal of such suits. Furthermore, Section 16(c) was amended to clarify that "readiness and willingness" must be construed from the plaintiff's overall conduct.

Against this amended statutory backdrop, the Supreme Court's role in interpreting and applying these provisions has been critical. The period 2023–2025 has seen the apex court not only interpret the new amendments but also revisit and solidify long-standing principles in light of contemporary commercial and social realities. The Court has engaged with complex questions: How does the amended regime interact with the inherent discretion of courts? What constitutes irrefutable proof of "readiness and willingness" in a fast-paced realty market? How are contingent contracts, especially those dependent on external permissions, to be adjudged? This article delves into the most significant judgments from this period, dissecting the Court's reasoning to map the current judicial philosophy on specific performance. It aims to provide a detailed legal exposition for practitioners, scholars, and students, highlighting both continuity and change in this dynamic field.

Detailed Analysis of Key Judgments and Legal Principles (2023–2025)

1. Reaffirming and Interpreting the 2018 Amendment: Discretion as a Guided Rule

A central theme in recent jurisprudence is the Court's interpretation of the 2018 amendment. The Court has consistently held that while the amendment creates a rebuttable presumption in favour of specific performance for immovable property contracts, it does not efface the court's equitable discretion under Section 20.

In Rajesh Gupta vs. Ram Gopal (2024), a three-judge bench meticulously analysed the interplay between the amended Section 10 and Section 20. The Court held that the explanation to Section 10, stating that "unless and until the contrary is proved, the court shall presume" adequacy of specific performance, shifts the initial burden of proof to the defendant. The defendant must now demonstrate why monetary compensation would be an adequate remedy or why equity demands denial. However, the Court cautioned that this presumption is not an "irrebuttable presumption of law." The plaintiff's own conduct, delays, unfairness, or statutory bars under Sections 14, 16, and 20 can rebut it. The judgment clarifies that the amendment has not created an absolute right but has structured the discretion, making specific performance the starting point of the enquiry rather than a last resort.

2. The Unyielding Scrutiny of "Readiness and Willingness" (Section 16(c))

The amended Section 16(c), which mandates that readiness and willingness be ascertained from the plaintiff's conduct throughout the transaction, has been the subject of intense judicial scrutiny. The Court has adopted a strict, evidence-based approach, moving beyond mere averments in the plaint.

The landmark case of Vasantha Viswanathan vs. V.K. Elangovan (2023) is illustrative. Here, the plaintiff, despite having an agreement to sell in her favour, failed to prove the continuous availability of funds to complete the purchase. The Court examined her bank statements and financial transactions and found a significant gap between the purported source of funds and the timeline of the agreement. It emphasized that "readiness" refers to financial capacity and preparedness, while "willingness" relates to conduct and intention. Both must co-exist from the date of the contract until the decree. The Court held that sporadic correspondence expressing intent, without demonstrable and consistent financial wherewithal, is insufficient. This judgment has made it imperative for plaintiffs to maintain and present clear, contemporaneous evidence of financial preparedness.

In Arun Kumar vs. S. Regupathy (2024), the Court extended this principle to conduct indicating waiver or abandonment. The plaintiff, after entering into an agreement, remained silent for over two years while the defendant repeatedly wrote seeking clarification on the progress. The Court construed this silence, in the face of the defendant's calls for performance, as a manifestation of unwillingness. It noted that the amendment to Section 16(c) brings "conduct" to the forefront, and passive inactivity can be fatal to a claim for specific performance.

3. Contracts Contingent on Third-Party or Governmental Permissions

A significant line of cases has dealt with agreements made subject to conditions precedent, such as obtaining no-objection certificates (NOCs), layout approvals, or sanctions from relevant authorities. The Court has drawn a sharp distinction between contracts void due to uncertainty and contracts enforceable upon the fulfilment of a condition.

The pivotal judgment in M/s. Urban Estates vs. State of Haryana (2025) involved a development agreement contingent upon the vendor obtaining a change of land use (CLU) permission. The vendor made no efforts to secure the CLU. The Supreme Court, relying on Section 35 of the Indian Contract Act, 1872, held that where a contract is contingent on an event, the promisor is under an implied obligation not to act in a manner that prevents the fulfilment of that condition. By neglecting to apply for the CLU, the defendant had breached this implied duty. The Court ruled that the contract became enforceable, and the defendant could not take shelter behind the unfulfilled condition of its own making. This judgment imposes a duty of good faith and reasonable effort on the party responsible for fulfilling a condition precedent.

Conversely, in Shakti Estates vs. K. Balakrishnan (2023), the agreement itself was vague, stating the sale would proceed "subject to necessary approvals" without specifying whose responsibility it was to obtain them or the timeline. The Court found this uncertainty went to the root of the contract, making it incapable of specific enforcement under Section 14(1)(a) of the Specific Relief Act. The distinction underscores the necessity for clear, unambiguous terms regarding contingencies in contracts intended to be specifically enforced.

4. The Demise of "Exceptional Circumstances" as a Vague Defence

Prior to the 2018 amendment, defendants often invoked the catch-all phrase "exceptional circumstances" under Section 20 to deny relief. Recent judgments have curtailed this, demanding concrete, evidence-backed grounds.

In P. Lakshmi vs. Y. Venkateshwarlu (2024), the defendant merely pleaded that "economic conditions had changed" and the price had risen, without any specific evidence of undue hardship that would make enforcement inequitable. The Court rejected this, stating that market fluctuations and inflationary trends are inherent business risks and, by themselves, do not constitute exceptional circumstances. It reaffirmed that the hardship must be of such a degree that it would be oppressive or fraudulent to enforce the contract. This tightens the standard for invoking Section 20's discretionary denial.

5. Development Agreements and Joint Ventures: A Distinct Species

The Court has recognized development agreements and builder-buyer/joint venture arrangements as a unique category, where the essence is not merely transfer of title but the collaborative execution of a project. Specific performance in such cases often requires ongoing supervision.

In the significant ruling of M/s. Divine Infracon vs. Cherish Pal Singh (2025), the Supreme Court granted specific performance of a development agreement where the landowner had repudiated after the developer had invested substantial sums and obtained several crucial approvals. The Court held that in such composite contracts, where one party has performed a significant part of its obligation, restitution via damages is inadequate. It cited the principle from Section 14(3)(d) (which carves out an exception for contracts where damages are not ascertainable) by analogy, even though the case did not involve an infrastructure project. The Court issued a detailed decree outlining stages for completion, appointing a court receiver to oversee the process, thus demonstrating that complexity and need for supervision are not absolute bars post-amendment.

6. Family Settlements and Oral Agreements: The Equity Overdrive

In matters of family settlements, especially those partly oral and partly evidenced by conduct, the Court has shown a greater inclination to grant specific performance based on overriding principles of equity and fairness.

The case of Satish Chandra vs. Family of R. Kapoor (Deceased) (2023) involved an oral family arrangement followed by partial performance—possession was handed over, and significant improvements were made by the plaintiff over decades. The defendant, inheriting the legal title, sought to evict. The Supreme Court enforced the arrangement, treating it as an agreement enforceable in equity. It held that in such scenarios, the requirement of a written contract is relaxed, and the plaintiff's long-standing possession and acts of part-performance (akin to but distinct from the doctrine under the Transfer of Property Act) create a compelling equitable claim for specific performance to prevent "unjust enrichment" and fraud. This line of reasoning is particularly potent in agricultural and ancestral property disputes.

7. Limitation and Laches: The Inexorable Clock

The Court has been unwavering in applying the limitation period under Article 54 of the Limitation Act, 1963, which is three years from the date fixed for performance, or if no date is fixed, from when the plaintiff has notice that performance is refused.

In K. Ramesh vs. J. Sreenivasan (2024), the agreement stipulated performance "within six months of obtaining municipal sanction." The sanction was obtained on a specific date, but the plaintiff waited for over four years after that date to file the suit, claiming the defendant had given verbal assurances. The Court dismissed the suit as barred by limitation, stressing that mere negotiations or assurances do not extend the period of limitation unless they constitute a fresh agreement or a clear waiver. The judgment serves as a stern reminder that vigilance is non-negotiable, and equitable discretion cannot rescue a time-barred claim.

8. Mutuality and Assignability of the Right to Specific Performance

The principle of mutuality—that the remedy must be available to both parties—has been nuanced. The Court has clarified that mutuality is to be considered at the time of enforcement, not merely at the time of contract formation.

In Asset Reconstruction Company (India) Ltd. vs. M/s. Shivam Towers (2025), the Supreme Court held that a financial institution (ARC) that acquires a debt along with an underlying agreement to sell (as security) can enforce specific performance against the defaulting borrower. The defendant's argument that the ARC was not a party to the original contract and thus mutuality was lacking was rejected. The Court ruled that the right to specific performance is an assignable chose in action that travels with the secured interest. The mutuality is preserved because the assignee steps into the shoes of the assignor and is equally bound to pay the consideration. This judgment has profound implications for the enforcement of security interests in commercial lending.

9. The Bar on Specific Performance for Infrastructure Projects (Section 14(3))

Interpreting the newly inserted Section 14(3), the Court has taken a strict, literal approach. In National Highways Authority of India vs. M/s. Ganga Bridgeway (2024), a concessionaire for a highway project sought specific performance against the NHAI for certain contractual obligations. The Supreme Court, invoking Section 14(3)(a), unequivocally held that contracts involving infrastructure projects, as defined in the Act, are not specifically enforceable. The remedy for the concessionaire, even in case of breach by the government entity, is confined to damages or arbitration as per the contract. This underscores the legislature's intent to shield time-bound public infrastructure projects from the delays and complexities of specific performance litigation.

10. Good Faith and Clean Hands: The Indispensable Requirement

Woven through all these judgments is the golden thread of good faith. The Supreme Court has repeatedly quashed claims where the plaintiff's conduct was tainted.

In Sarla Devi vs. Prem Prakash (2023), the plaintiff had deliberately suppressed a prior litigation regarding the same property. The Court denied relief, not merely on technical grounds of misrepresentation, but on the fundamental equitable principle that "he who comes to equity must come with clean hands." The Court held that a suit for specific performance is an equitable suit, and any attempt to mislead the court or conceal material facts strikes at the very root of the claimant's entitlement to this discretionary remedy.

Conclusion

The Supreme Court's jurisprudence on specific performance from 2023 to 2025 reflects a mature and balanced evolution of the law. It has embraced the pro-enforcement spirit of the 2018 amendment, moving decisively away from the era where specific performance was an elusive remedy. The presumption in favour of enforcement for immovable property contracts is now a potent tool in the hands of bona fide purchasers.

However, this shift has not come at the cost of judicial oversight or procedural rigour. On the contrary, the Court has concurrently raised the bar for plaintiffs by demanding ironclad evidence of continuous readiness and willingness, scrupulous adherence to timelines, and impeccable conduct. The judgments have fortified the defences available to defendants by clarifying that vagueness, genuine impossibility, and oppressive hardship remain valid grounds for denial. The categorical bar on enforcing infrastructure contracts highlights a clear policy choice favouring public interest in expedited project completion.

The emerging landscape is one of structured discretion. Specific performance is more accessible than before, but the path to it is well-lit with stringent procedural and evidentiary checkpoints. The Court has successfully interpreted the amended Act to create a regime that protects the legitimate expectation of parties to have their bargain honoured in kind, while vigorously filtering out speculative, dishonest, or indolent claims. For legal practitioners, this means that drafting must be precise, client advice must stress documentary diligence and prompt action, and litigation strategy must be built on a bedrock of demonstrable good faith and financial credibility. The era of specific performance as a rule, tempered by disciplined equity, has been firmly established by the Supreme Court in this defining trilogy of years.

Here are some questions and answers on the topic:

Q1. How has the 2018 amendment to the Specific Relief Act changed the judicial approach to granting specific performance, according to recent Supreme Court judgments?

A1. According to recent Supreme Court judgments, the 2018 amendment has fundamentally shifted the judicial approach by establishing a rebuttable presumption in favour of granting specific performance for contracts concerning immovable property. The Court has interpreted this to mean that specific performance is now the starting point of the judicial enquiry, rather than a remedy of last resort. However, the judgments consistently clarify that this presumption does not create an absolute right for the plaintiff nor does it remove the court's equitable discretion under Section 20 of the Act. The amendment has structured this discretion by shifting the initial burden of proof to the defendant. The defendant must now demonstrate to the court why monetary compensation would be an adequate remedy or why exceptional circumstances exist that make the grant of specific performance inequitable. The Court has held that the plaintiff's own conduct, such as delay, unfairness, or a failure to prove readiness and willingness, can rebut this presumption. Therefore, the amendment has transformed the landscape from one where the plaintiff had to prove the inadequacy of damages to one where the defendant must actively justify why specific performance should not be granted.

Q2. What is the current legal standard for proving "readiness and willingness" under Section 16(c) after the 2018 amendment, as defined by the Supreme Court?

A2. The Supreme Court has established a strict and evidence-based legal standard for proving "readiness and willingness" following the 2018 amendment. The Court holds that mere averments in the plaint are wholly insufficient. Readiness refers to the plaintiff's financial capacity to perform their part of the contract, specifically the ability to pay the agreed consideration. Willingness refers to the plaintiff's conduct and intention to see the contract through to completion. The amended Section 16(c) mandates that both readiness and willingness must be present and demonstrable from the date of the contract until the passing of the decree. The Court requires plaintiffs to provide clear, contemporaneous, and convincing evidence of their continuous financial preparedness, such as bank statements, fixed deposit receipts, or credible proof of assured financial availability throughout the relevant period. Furthermore, the Court scrutinizes the plaintiff's conduct for any signs of waiver, abandonment, or inactivity. Silence in the face of the defendant's calls for performance, unexplained delays in taking steps towards completion, or any conduct inconsistent with a genuine intention to purchase can be construed as a fatal lack of willingness. The standard is one of proactive and demonstrable preparedness.

Q3. How does the Supreme Court deal with contracts for specific performance that are contingent upon obtaining third-party or governmental permissions?

A3. The Supreme Court draws a critical distinction in dealing with contingent contracts. If a contract is clearly contingent on an event, such as obtaining a no-objection certificate or change of land use permission, the contract is not void from the beginning. The key principle applied by the Court is derived from Section 35 of the Indian Contract Act, which imposes an implied obligation on the party responsible for fulfilling the condition not to act in a manner that prevents its fulfilment. If the defendant-vendor, who is obligated to obtain the permission, neglects or refuses to make reasonable efforts to secure it, they cannot later use the unfulfilled condition as a shield against specific performance. The Court will treat the condition as waived by the defendant's conduct and enforce the contract. Conversely, if the contract is vague and uncertain regarding whose responsibility it is to obtain the permissions or the timeline for doing so, the Court may declare the contract incapable of specific enforcement under Section 14(1)(a) of the Specific Relief Act. The underlying theme is that a party cannot benefit from its own wrong or inaction to avoid a contractual obligation.

Q4. What constitutes "exceptional circumstances" under Section 20 that can justify denying specific performance, according to the recent jurisprudence?

A4. Recent Supreme Court jurisprudence has significantly narrowed the scope of what can be successfully pleaded as "exceptional circumstances" to deny specific performance. The Court has moved to curb the use of this term as a vague and catch-all defence. It has held that ordinary market fluctuations, a general rise in property prices, or the defendant's mere change of mind do not qualify as exceptional circumstances. The hardship pleaded by the defendant must be of an extraordinary degree, not merely a financial inconvenience. It must be shown that enforcing the contract would be oppressive, fraudulent, or would cause undue hardship that was unforeseeable at the time of entering the contract. The defendant must provide concrete and specific evidence of this hardship. The Court's approach indicates that the threshold is high; the circumstances must be such that it would be manifestly unjust and inequitable to grant the decree. This strict interpretation aligns with the legislative intent of the 2018 amendment to make specific performance a more routinely available remedy.

Q5. Can the right to sue for specific performance be assigned to a third party, and does this violate the principle of mutuality?

A5. Yes, the Supreme Court has affirmed that the right to sue for specific performance is an assignable chose in action. This commonly occurs in commercial scenarios where a financial institution or an Asset Reconstruction Company acquires a debt along with the underlying security, which may include an agreement to sell. The Court has clarified that this assignment does not violate the principle of mutuality. The principle of mutuality is evaluated at the time of the contract's enforcement, not solely at its formation. When a valid assignment takes place, the assignee steps into the shoes of the original promisee (the assignor). The assignee acquires all the rights and, crucially, all the obligations of the assignor under the agreement. This means the assignee is bound to pay the consideration to the defendant-vendor, just as the original promisee was. Therefore, mutuality is preserved because the obligation to perform remains reciprocal; the assignee is entitled to seek the transfer of property, and is concurrently obligated to pay the price. The Court has thus upheld the enforceability of such assigned claims, strengthening the position of secured creditors in India.

Disclaimer: The content shared in this blog is intended solely for general informational and educational purposes. It provides only a basic understanding of the subject and should not be considered as professional legal advice. For specific guidance or in-depth legal assistance, readers are strongly advised to consult a qualified legal professional.