Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-000050-000050 – 2026 |
| Diary Number | 60800/2025 |
| Judge Name | HON’BLE MR. JUSTICE VIKRAM NATH |
| Bench | HON’BLE MR. JUSTICE VIKRAM NATH, HON’BLE MR. JUSTICE SANDEEP MEHTA |
| Precedent Value | Binding precedent |
| Overrules / Affirms | Affirms existing Supreme Court precedents on readiness and willingness |
| Type of Law | Contractual law – Specific Performance and Equitable Remedies |
| Questions of Law |
|
| Ratio Decidendi |
The Court held that readiness and willingness to perform a contract for sale must be assessed flexibly, not by a straitjacket formula, in light of all facts. Where both parties have failed to perform contractual obligations over a prolonged period, equity demands prevention of unjust enrichment and restoration of parties as far as possible to their original positions. Merely forfeiting earnest money can result in an inequitable windfall. Therefore, specific performance can be refused and a lump-sum refund or adjustment of earnest money ordered to balance the equities between the parties. |
| Logic / Jurisprudence / Authorities Relied Upon by the Court |
|
| Facts as Summarised by the Court |
The appellant and respondents executed an Agreement to Sell dated 22.01.2008 for a property in Delhi, with Rs. 90 lakhs paid in two installments. The Trial Court decreed specific performance, which was initially upheld by the High Court but set aside on re-examination. On remand, the High Court dismissed the suit and directed forfeiture of Rs. 60 lakhs earnest money while refunding Rs. 30 lakhs with interest. The appellant appealed to this Court. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All courts, including High Courts and subordinate courts |
What’s New / What Lawyers Should Note
- Reinforces that readiness and willingness must be evaluated on case-specific facts rather than by rigid tests.
- Affirms that equitable relief of specific performance may be refused after prolonged defaults by both parties.
- Establishes that forfeiture of earnest money without adjustment may lead to unjust enrichment and should be replaced by equitable restitution.
- Permits courts to order lump-sum refund or adjustment of earnest money as a complete remedy to balance equities.
Summary of Legal Reasoning
- The appellant failed to prove readiness and willingness to make the balance payment by the due date, demonstrated by lack of funds and failure to appear at the Sub-Registrar’s office.
- Both parties defaulted on contractual obligations, with respondents not securing mutation and conversion of the property.
- The Court reiterated that no fixed formula applies to ‘readiness and willingness’, and prolonged inaction over seventeen years militates against specific performance as an equitable remedy.
- Equity requires avoiding unjust enrichment; automatic forfeiture of earnest money would grant an inequitable windfall to the respondents.
- To balance equities and restore the parties’ original positions, the Court substituted forfeiture with an order directing respondents to pay Rs. 3 crores to the appellant.
Factual Background
In 2008, the parties entered into an Agreement to Sell for a Delhi property, with the buyer paying Rs. 60 lakhs as earnest money and Rs. 30 lakhs as part payment. The Trial Court granted specific performance in 2021, holding the buyer ready and willing. The High Court initially upheld the decree but, on remand from this Court, later dismissed the suit, forfeited the earnest money, and refunded the part payment with interest. The buyer appealed to the Supreme Court, which modified the relief by ordering a lump-sum refund to balance equities.
Alert Indicators
- ✔ Precedent Followed