DATE: 05/01/2026
COURT: Supreme Court of India
BENCH: Justice Vikram Nath and Justice
Sandeep Mehta
FACTS:
The appellant (plaintiff) entered into an
Agreement to Sell dated 22.01.2008 with the respondents (defendants) for
purchasing 300 square yards of property at C-20, Ashok Vihar, Phase-1, Delhi,
for a total consideration of Rs. 6.11 Crores. The appellant paid Rs. 60 lakhs
as earnest money on the agreement date and an additional Rs. 30 lakhs as part
payment on 24.03.2008, which the respondents acknowledged. The balance of Rs.
5.21 Crores was due by 10.05.2008. However, disputes arose as the appellant
claimed readiness and willingness to pay, while alleging the respondents failed
to fulfill obligations like obtaining mutation and converting the property from
leasehold to freehold. The appellant filed suit CS(OS)/1765/2008 for specific
performance, which the Trial Court (Single Judge) decreed in his favor on
15.02.2021, finding the appellant ready and willing but the respondents in
default.
The respondents appealed via RFA(OS) No.
12/2021, which the Delhi High Court initially dismissed on 12.04.2021,
affirming the appellant's financial capacity. The respondents then appealed to
the Supreme Court in SLP No. 12465/2021, which allowed the appeal and remanded
the matter for fresh consideration by the High Court. On remand, the High
Court, by order dated 03.09.2025, set aside the specific performance decree,
dismissed the suit for that relief, allowed forfeiture of the Rs. 60 lakhs
earnest money, but directed refund of the Rs. 30 lakhs with 9% interest from
24.03.2008. Aggrieved by the denial of specific performance and forfeiture, the
appellant appealed to the Supreme Court, arguing merit in his readiness and
willingness, while the respondents defended their non-compliance due to the
appellant's defaults.
ISSUES:
The primary issues before the Supreme Court
were whether the appellant had sufficiently demonstrated readiness and
willingness to perform his obligations under the Agreement to Sell dated
22.01.2008, entitling him to specific performance of the contract for the Delhi
property; whether the respondents' failure to meet their reciprocal duties
(e.g., mutation and freehold conversion) justified the decree; and whether, in
the absence of specific performance after 17 years, equity demanded alternative
relief such as forfeiture of earnest money, refund of payments, or lumpsum
compensation to avoid unjust enrichment and restore parties to their original
positions.
JUDGEMENT WITH REASONING:
The Supreme Court partly allowed the
appeal, modifying the Delhi High Court's order dated 03.09.2025 by directing
the respondents to pay a lumpsum of Rs. 3 Crores to the appellant within four
weeks, while upholding the denial of specific performance and the refund of Rs.
30 lakhs with 9% interest, but setting aside the forfeiture of Rs. 60 lakhs
earnest money to adjust equities.
The Court concurred with the High Court's
finding that the appellant failed to prove readiness and willingness, as he
could not demonstrate financial wherewithal for the Rs. 5.21 Crores balance
payment by the due date of 10.05.2008 and did not appear at the Sub-Registrar's
office, key requirements under Section 16(c) of the Specific Relief Act, 1963.
However, it also noted the respondents' defaults in not securing mutation or
freehold conversion, indicating mutual faults. Citing precedents, the Court
emphasized that "readiness and willingness" lacks a straitjacket
formula and must be assessed case-specifically, but after 17 years since the
agreement, specific performance was no longer equitable due to changed
circumstances, potential hardship, and the discretionary nature of the relief
under Section 20 of the Act. Instead, equity demanded intervention to prevent
unjust enrichment, as full forfeiture of Rs. 60 lakhs would unfairly benefit
the respondents without compensating the appellant's partial payments and prolonged
litigation.
To achieve complete justice under Article
142 of the Constitution, the Court balanced equities by directing a Rs. 3
Crores lumpsum payment, restoring parties closer to their original positions
while avoiding further contract enforcement complications. This approach
aligned with settled principles that equity operates to prevent windfalls,
especially in protracted disputes, and brought quietus to the over-decade-long
litigation. The modification ensured the appellant's restitution without enforcing
the stale contract, while the respondents retained the property but compensated
for their breaches, underscoring the Court's focus on practical, fair outcomes
over rigid contractual enforcement.
ANALYSIS:
In the Supreme Court appeal arising from
the Agreement to Sell dated 22.01.2008 for a Delhi property valued at Rs. 6.11
Crores, the Court partly allowed the plaintiff-appellant's challenge to the
Delhi High Court's order dated 03.09.2025, which had reversed the Trial Court's
decree of specific performance and permitted forfeiture of Rs. 60 lakhs earnest
money while ordering refund of Rs. 30 lakhs with interest. The Court upheld the
denial of specific performance, agreeing that the appellant failed to
conclusively prove readiness and willingness under Section 16(c) of the
Specific Relief Act, 1963, as he neither demonstrated sufficient financial
capacity for the Rs. 5.21 Crores balance on the due date (10.05.2008) nor
attended the Sub-Registrar's office. However, it also acknowledged mutual
defaults, noting the respondents' failure to obtain mutation and convert the
property from leasehold to freehold, which contributed to the impasse. After 17
years of protracted litigation, the Court deemed specific performance
inequitable due to changed circumstances, potential hardship, and the
discretionary nature of the relief under Section 20 of the Act, emphasizing
that no straitjacket formula applies to readiness and willingness, which must
be judged on case-specific facts.
Invoking its extraordinary powers under
Article 142 to do complete justice and prevent unjust enrichment, the Supreme
Court modified the High Court's order by setting aside the forfeiture of Rs. 60
lakhs earnest money and directing the respondents to pay a lumpsum compensation
of Rs. 3 Crores to the appellant within four weeks, in addition to the
already-ordered refund of Rs. 30 lakhs with 9% interest from 24.03.2008. This
pragmatic adjustment balanced equities between the parties' mutual faults,
ensured restitution for the appellant's substantial advance payments and long
pendency, and allowed the respondents to retain the property without an undue
windfall. The decision underscores the Court's preference for equitable
solutions in stale real estate contracts, prioritizing practical restoration of
parties' positions over rigid enforcement of old agreements, thereby providing
finality to a dispute spanning more than a decade.
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