Unilateral Termination After Waiver Can Be Ignored: Specific Performance Maintainable Without Declaratory Relief; Limits on Second Appeal Interference

Introduction

In Annamalai v. Vasanthi and Others, 2025 INSC 1267 (Supreme Court of India, 29 October 2025), the Supreme Court resolved a recurring cluster of questions arising in suits for specific performance of contracts for sale of immovable property:

When can a High Court, in a second appeal under Section 100 of the Code of Civil Procedure (CPC), interfere with findings of fact of the first appellate court?
Does a plaintiff seeking specific performance necessarily have to sue for a declaration setting aside the seller’s termination notice, or can such termination be ignored in appropriate circumstances?
How do waiver and acceptance of performance at a time other than agreed (Section 55 of the Contract Act, 1872) interact with the “time is of the essence” argument in property sale contracts?

The litigation involved two consolidated suits over the same property. The appellant-purchaser, Annamalai, sued for specific performance of a registered sale agreement dated 08.01.2010, whereas the first respondent, Vasanthi (daughter of one of the vendors), sued for declaration and injunction as an alleged bona fide purchaser. The trial court dismissed specific performance and decreed Vasanthi’s suit; the first appellate court reversed both; the High Court, in second appeals, again set aside specific performance and ordered refund of earnest money. The Supreme Court allowed the appeals, restoring the first appellate court’s decree of specific performance.

Summary of the Judgment

The Supreme Court (Manoj Misra, J.; J.B. Pardiwala, J. concurring) held:

Section 100 CPC restraint reaffirmed: The High Court erred in reappreciating evidence to discard the first appellate court’s finding that an additional ₹1,95,000 was paid and acknowledged by the vendors on 09.06.2010. The first appellate court is the final fact-finding court; its findings could be disturbed only for perversity, misreading, ignoring admissible evidence, or reliance on inadmissible evidence—none of which applied.
Presumption of due endorsement on admitted signatures: Once the vendors admitted their signatures/thumb marks on the endorsement acknowledging receipt of money, a presumption under Section 114, Evidence Act, 1872 (Illustration (c)) arose that the endorsement was for good consideration. The burden shifted heavily to the vendors to rebut this—unmet on the facts.
Readiness and willingness established: With ₹4,70,000 of ₹4,80,000 paid upfront and an additional ₹1,95,000 accepted later at the vendors’ demand, the purchaser’s readiness and willingness to perform was amply demonstrated. Non-issue of a notice within the original six months was not fatal in light of subsequent waiver.
Waiver by accepting late performance: Acceptance of additional money after the six-month period signified that the vendors treated the contract as subsisting and waived any right to forfeit earnest money for non-payment of the residual ₹10,000 within six months (Section 55, Contract Act). Generally, time is not of the essence in immovable property contracts unless clearly made so and consistently adhered to.
No mandatory declaratory relief to invalidate termination: A declaratory relief is needed only where a cloud or doubt over the plaintiff’s right must be removed before the consequential relief can be granted. Where a unilateral termination is void for lack of contractual authority or after the promisor’s waiver, it may be treated as a repudiatory breach; the plaintiff may sue for specific performance without separately seeking a declaration that termination is invalid.
Discretion under pre-2018 Specific Relief Act: Applying the pre-amendment regime (suits filed and High Court judgment pre-dated 01.10.2018), there was no ground to deny the equitable relief of specific performance. The plaintiff had not approached with “unclean hands”, and the transferee (respondent-daughter) was not a bona fide purchaser for value.
Result: The Supreme Court set aside the High Court’s decree, restored the first appellate court’s decree for specific performance, and directed the plaintiff to deposit the balance ₹10,000 (if not already deposited) within one month in the execution court (Order XX Rule 12-A CPC).

Detailed Analysis

Factual matrix and procedural history

The property originally belonged to Ponnusamy and his daughter Selvi. Registered powers of attorney were issued in favour of the appellant Annamalai and one Saraswathi (D-1). On 07.07.2009, item 2 of the suit property was sold to Saraswathi (D-1) and her son Dharmalingam (D-2). On 08.01.2010, a registered agreement to sell both items to Annamalai was executed by D-1 (as POA holder and co-owner of item 2) and D-2 for ₹4,80,000, of which ₹4,70,000 was paid upfront; the residual ₹10,000 was due within six months. On 09.06.2010, at the vendors’ demand, Annamalai paid an additional ₹1,95,000, endorsed by D-1/D-2 on the back of the agreement. On 17.08.2010, D-1 and D-2 transferred item 1 to Vasanthi (D-3, their daughter). A termination notice was issued on 20.08.2010. Annamalai responded on 04.09.2010 seeking execution.

The trial court disbelieved the sale agreement as a genuine sale agreement and dismissed specific performance, decreeing Vasanthi’s suit. The first appellate court reversed, decreeing specific performance and dismissing Vasanthi’s suit, holding the additional payment endorsement genuine. The High Court, in second appeals, reappreciated evidence, doubted the endorsement, held the plaintiff not ready and willing, and confined relief to refund of earnest money. The Supreme Court restored the first appellate decree.

Precedents and authorities cited

Section 100 CPC principles: The Court reiterated the limited grounds for interference in second appeal—perversity, ignorance or misreading of evidence, or reliance on inadmissible evidence. Although not naming a single case for Section 100, the Court applied settled doctrine that first appellate court is the final fact-finding court under the CPC structure.
Evidence Act, Section 114(c): Presumption that a person in possession of a document (or whose signature is admitted on an acknowledgment) acted for good consideration; burden shifts to prove otherwise.
Readiness and willingness: R.C. Chandiok v. Chuni Lal Sabharwal (1970) 3 SCC 140 and Syed Dastagir v. T.R. Gopalakrishna Setty (1999) 6 SCC 337: readiness/willingness is a holistic, conduct-driven inquiry. Ardeshir H. Mama v. Flora Sassoon (AIR 1928 PC 208): the plaintiff must show consistent intention to treat the contract as subsisting and preparedness to perform.
Time not ordinarily essence in immovable property contracts: Swarnam Ramachandran v. A.C. Jayapalan (2004) 8 SCC 689; the court must look to the parties’ real intention, conduct, and circumstances.
Contract Act, 1872, Section 55: Effect of acceptance of performance at a time other than agreed; acceptance without reservation operates as waiver of the right to treat time stipulation as essential for forfeiture or termination, unless notice is given at acceptance preserving such rights.
When is declaratory relief essential? Anathula Sudhakar v. P. Buchi Reddy (2008) 4 SCC 594 (framework on declarations and when clouds on title/rights require declaratory relief); Specific Relief Act, 1963, Section 31 (cancellation of instruments). Prem Singh v. Birbal (2006) 5 SCC 353 and Shanti Devi v. Jagan Devi (2025 SCC OnLine SC 1961) (void vs voidable instruments and their treatment).
Breach and repudiation: Anson’s Law of Contract (29th Ed.), forms of breach (renunciation, impossibility by conduct, non-performance); OPG Power Generation v. Enexio Power Cooling Solutions (2025) 2 SCC 417 (two tracks: accept termination and claim damages, or treat contract as subsisting and seek specific performance in proper cases).
Maintainability of specific performance without declaratory prayer: I.S. Sikandar v. K. Subramani (2013) 15 SCC 27 (where agreement empowered termination and was terminated, SP suit without declaration held not maintainable on those facts); Mrs. A. Kanthamani v. Mrs. Nasreen Ahmed (2017) 4 SCC 654 (Sikandar is fact-specific; maintainability objections must be pleaded; courts may intervene only where plaint is barred on its face); R. Kandasamy v. T.R.K. Sarawathy (2025) 3 SCC 513 (even without a framed issue, appellate courts can address jurisdictional maintainability if no new facts/evidence are needed—yet the necessity of a declaration depends on case facts).
Specific Relief Act (pre-2018) discretionary regime: Sections 10, 14, and 20 (pre-amendment) applied. Katta Sujatha Reddy v. Siddamsetty Infra (2023) 1 SCC 355 and review in Siddamsetty Infra v. Katta Sujatha Reddy (2024 INSC 861): the Court proceeded on the premise that pre-2018 discretionary framework applied, given the temporal setting.
“False” pleading vs unproved pleading: Ravinder Singh v. Sukhbir Singh (2013) 9 SCC 245: a pleading is “false” if knowingly incorrect, not merely because it is unproved.
Possession as a consequence of specific performance: Babu Lal v. Hazari Lal Kishori Lal (1982) 1 SCC 525: decree for specific performance ordinarily carries entitlement to possession.

The Court’s legal reasoning

1) Section 100 CPC: Why the High Court’s interference was unwarranted

The first appellate court accepted as genuine the endorsement (dated 09.06.2010) on the back of the registered agreement acknowledging receipt of an additional ₹1,95,000 by D-1/D-2. Crucially, the vendors admitted their signatures or thumb impressions on that page and claimed only that signatures were obtained on a blank sheet—an assertion the first appellate court rejected after appreciating evidence. The High Court brushed this aside via a one-line conclusion that genuineness was unproven, without addressing the first appellate court’s reasoning or identifying any perversity, misreading, or omission of relevant admissible evidence. That exceeded Section 100 CPC limits.

The Supreme Court added a doctrinal layer: once signatures are admitted on an acknowledgment of receipt of money, Section 114 (Illustration (c)) of the Evidence Act permits a presumption that the endorsement reflects good consideration; the evidentiary onus lay heavily on the vendors to explain the circumstances and dislodge the presumption—especially as the endorsement sat on the reverse of a registered contract. This was not done.

2) Readiness and willingness: A holistic inquiry, not a mechanical time-bar

The High Court faulted Annamalai for not demanding execution within six months and treated time as essence. The Supreme Court reversed course:

The purchaser had already paid ₹4,70,000 of ₹4,80,000 at inception and, at the vendors’ demand, paid an additional ₹1,95,000 on 09.06.2010.
Acceptance of this additional payment after the six-month period indicated that parties treated the agreement as subsisting; the vendors thereby waived any right to forfeit earnest money or rescind for non-payment of the residual ₹10,000 within six months.
Readiness and willingness must be assessed on the entirety of conduct and circumstances (Chandiok; Syed Dastagir; Ardeshir H. Mama). On these facts, the purchaser satisfied the court’s conscience as a ready and willing party.

Further, in contracts for sale of immovable property, time is ordinarily not of the essence, and the onus is on the party asserting it to demonstrate a contrary intention and consistent adherence (Swarnam Ramachandran). Acceptance of late performance without reservation (Section 55, Contract Act) undercuts any assertion that time was crucial for forfeiture/rescission.

3) Do you need a declaratory relief to invalidate termination? The clarified rule

The Court squarely addresses a common procedural pitfall: a purchaser sues for specific performance after receiving a termination notice from the vendor. Must the plaintiff always seek a declaration that the termination is invalid?

The answer is nuanced and fact-dependent:

When a declaration is essential: Where the contract clearly gives a party a unilateral right to terminate on specified contingencies and that right is invoked, a doubt or “cloud” arises over the subsistence of the contract. To enforce the contract through specific performance, the plaintiff ordinarily must first clear that cloud by a declaratory relief (I.S. Sikandar on its facts).
When a declaration is not essential: Where the contract confers no unilateral termination right, or such right has been waived by the promisee’s conduct (e.g., acceptance of performance after the agreed time without reservation), a subsequent unilateral “termination” is a mere repudiatory breach. The plaintiff can treat the contract as subsisting and sue for specific performance without seeking a declaration. In other words, a void/inefficacious termination (non est in law) need not be set aside.

Applying this framework, the Court found: the agreement contained no automatic termination clause; at most it contemplated forfeiture of earnest money for non-payment of the small balance within six months. That forfeiture right stood waived by accepting an additional ₹1,95,000 after six months. The vendors then compounded matters by selling part of the property to their daughter before even issuing a termination notice. In such circumstances, the termination was a void act under a varied (waived) contract. No declaratory relief was needed; the specific performance suit was maintainable.

4) Discretion to decree specific performance (pre-2018 regime)

Because the suits and High Court judgment predated 01.10.2018, the pre-amendment Specific Relief Act (Sections 10, 14, 20) governed. The Court noted:

The agreement was not of a nature excluded by Section 14 (pre-amendment). Explanation to old Section 10 presumed inadequacy of monetary compensation for breach of contracts to transfer immovable property.
There was no personal bar; readiness and willingness were established.
Equities favored the purchaser: over 90% of the original consideration had been paid, an additional sum was paid at the sellers’ demand, and the subsequent transferee (the vendors’ daughter) was not a bona fide purchaser for value, the sale being executed even before the termination notice.
A failed assertion of possession does not equate to a false claim disentitling equity. A statement is “false” only if knowingly incorrect (Ravinder Singh). In any event, a decree for specific performance ordinarily carries entitlement to possession (Babu Lal).

The High Court’s refusal of the equitable remedy on grounds of “clean hands” and “time is essence” was therefore unsustainable.

Impact and significance

This decision has several practical and doctrinal implications:

Declaratory relief in SP suits post-termination: The Court provides a workable test. Practitioners should examine the contract’s termination architecture and post-contract conduct:
- If a unilateral termination right exists and is plausibly invoked, plead and seek an appropriate declaration.
- If no such right exists, or it has been waived by the promisee (e.g., acceptance of late performance without reservation), a unilateral “termination” is a repudiatory breach that may be ignored in suing for specific performance.
Waiver by acceptance of late performance: Vendors accepting performance beyond the stipulated time (without contemporaneous reservation) undermine their ability to later assert “time is essence,” forfeiture, or rescission for that breach. Section 55 of the Contract Act is not merely compensatory; it also organizes the consequences of waiver.
Section 100 CPC discipline: High Courts must resist the temptation to reweigh evidence in second appeals. Findings of the first appellate court—especially on genuineness of acknowledgments and parties’ conduct—are insulated from interference save on classic perversity grounds.
Evidence Act presumptions applied pragmatically: Admissions of signatures on endorsements acknowledging receipt of money, particularly when made on or ancillary to a registered agreement, attract a presumption of due consideration. Sellers alleging “blank signed paper” must meet a heavy burden to rebut the presumption.
Property sale contracts and time stipulations: The default position remains: in immovable property deals, time is ordinarily not of the essence, and courts will scrutinize post-agreement conduct to ascertain intention and waiver.
Transferees closely related to vendors: Where the transferee is a related party with awareness of the prior agreement (evidenced, inter alia, by timing of transfer before termination), bona fides are suspect; such transferees typically take subject to the prior equity.
Transitional note on Specific Relief Act amendments: Although the 2018 amendments curtail discretion and make specific performance a rule in many scenarios, this judgment remains salient for pre-amendment suits and, doctrinally, for issues of waiver, termination, maintainability, and Section 100 CPC jurisdiction applicable across eras.

Complex Concepts Simplified

Readiness and willingness: The buyer’s consistent conduct showing readiness (financial and logistical capability) and willingness (intention to complete) to perform. It is not a box-ticking exercise; courts look at the entire behavior, payments made, responses to demands, and overall diligence.
Waiver: Voluntary relinquishment of a known right. For example, if a seller accepts payment after the deadline without reserving rights, the seller may be held to have waived the right to insist on that deadline and remedies dependent upon it (like forfeiture).
Acceptance of late performance (Section 55, Contract Act): If a party accepts performance at a different time than agreed, they cannot, unless they expressly reserve the right at the moment of acceptance, claim loss due to lateness or use lateness to rescind/forfeit when their conduct shows the contract continues.
Cloud on rights vs. void act: A “cloud” exists when a competing legal claim or instrument plausibly impairs the plaintiff’s right, requiring a declaration to clear it. A “void” act (non est) is a legal nullity that can be ignored; no declaration is necessary. Whether a termination notice raises a cloud depends on the contract’s termination clauses and the parties’ subsequent conduct.
Second appeal constraints (Section 100 CPC): A second appeal lies only on substantial questions of law. The High Court cannot reappraise evidence or substitute factual findings unless the lower appellate court’s findings are perverse, based on no evidence, ignore vital admissible evidence, or rest on inadmissible material.
“False” pleading: A pleading is “false” when the maker knows it is incorrect, not merely because the party fails to prove it.
Specific performance (pre-2018): An equitable, discretionary remedy generally available for contracts to sell immovable property unless barred by statute (old Section 14) or inequitable (old Section 20). Monetary damages are presumed inadequate for land transfers (old Section 10 Explanation).

Conclusion

Annamalai v. Vasanthi recalibrates three practical levers in specific performance litigation:

It clarifies that not every termination notice compels a plaintiff to seek a declaration; where unilateral termination lacks a contractual foundation or is preceded by the promisee’s waiver, it is a mere repudiation that can be ignored in suing for specific performance.
It strengthens the waiver doctrine in property sales: vendors who accept late or additional payments without reservation treat the contract as subsisting and cannot later defeat specific performance through mechanical reliance on elapsed deadlines.
It fortifies the discipline of second appeals: the first appellate court’s factual determinations, particularly on endorsements and conduct, are not to be overturned absent established grounds under Section 100 CPC.

By restoring the decree of specific performance and directing only a nominal balance to be deposited, the Supreme Court signals that equity and commercial reality—substantial payments, clear acknowledgments, and seller-induced complications—will drive outcomes over technical maneuvers. The judgment is a valuable guide for drafting termination clauses, managing post-agreement conduct, and structuring litigation strategy in suits for specific performance of immovable property contracts.