Somnath Kharbanda (Since Deceased) Through His Lrs & Ors. vs Arvinder Kaur (Since Deceased) Through Her Lrs

* IN THE HIGH COURT OF DELHI AT NEW DELHI
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% Reserved on: 10 August, 2026
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Pronounced on: 27 October, 2026
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Uploaded on: 27 October, 2026

# CNR No. DLHC010365232026

+ RFA 814/2026, CM APPL. 52540-52541/2026

1. Sh. Somnath Kharbanda,
(Since Deceased) Through His Lrs.

1.1 Smt. Parveen Rani (Deceased),
W/o Late Sh. Som Nath Kharbanda,
R/o 6/2, 2nd Floor, Ramesh Nagar,
New Delhi-110015

1.2 Sh. Gagan Kharbanda,
S/o Late Sh. Som Nath Kharbanda,
R/o 6/2, 2nd Floor, Ramesh Nagar,
New Delhi-110015

2. Sh. Anoop Kharbanda,
(Since Deceased) Through his LRs

2.1 Smt. Kavita Kharbanda,
W/o Late Sh. Anoop Kharbanda.

2.2 Vaani Kharbanda,
(Minor daughter),
D/o Late Sh. Anoop Kharbanda,
Through her Mother/Natural
Guardian Smt. Kavita Kharbanda.

2.3 Pranshul Kharbanda,
(Minor Son),
S/o Late Sh. Anoop Kharbanda,
Through his Mother/Natural
Signature Not Verified
Digitally Signed
By:VIKAS ARORA
Signing Date:27.10.2026
19:46:09
RFA 814/2026 Page 1 of 16

Guardian Smt. Kavita Kharbanda.

nd
All R/o 6/2, 2 Floor,
Ramesh Nagar, New Delhi-110015. ....Appellants
Through: Ms. Tejasvi Mohan, Advocate.

versus

1. Smt. Arvinder Kaur,
(Since Deceased) Through Her Lrs

1.1 Sh. Ranjit Singh Maggu,
S/o Late Sardar Rawail Singh,
R/o B-5, Saraswati Garden,
New Delhi-110015.

1.2 Sh. Gagandeep Singh
S/o Sardar Ranjit Singh Maggu,
R/o 41, Chateau Rise,
Flat Bus Aucki, and

1.3 Ms. Jasmine Kaur
D/o Sardar Ranjit Singh Maggu,
R/o B-5, Saraswati Garden,
New Delhi-110015. .....Respondents
Through: None
CORAM:
HON'BLE MS. JUSTICE NEENA BANSAL KRISHNA
J U D G M E N T
NEENA BANSAL KRISHNA, J.

1. The Appeal under Section 96 of the Code of Civil Procedure
(hereinafter referred to as the ‘CPC’) has been filed on behalf of the
Appellants/Defendants against the Judgment and Decree dated 20.03.2026,
Signature Not Verified
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whereby the Suit of the Plaintiffs/Respondents was partly decreed for
refund of Rs. 4,00,000/-, being the earnest money paid to them, along with
pendente lite and future interest @ 6% p.a., by the learned District Judge
Delhi.
2. The Plaintiff had filed a Suit Civ. DJ No. 9472/2016 for recovery of a
total sum of Rs. 8,00,000/- along with interest @ 12% p.a., as compensation
for breach of Agreement to Sell dated 21.06.2008.
3. The facts, in brief, are that Ms. Arvinder Kaur, the original Plaintiff
(since deceased who is now represented by her legal heirs), entered into an
Agreement to Sell dated 21.06.2008 with the original Defendants, Mr.
Somnath Kharbanda and Mr. Anoop Kharbanda, for a sale consideration of
Rs. 40,00,000/-(forty lacs). A sum of Rs. 4,00,000/- was paid in cash as
earnest money under the Agreement to Sell and a Receipt was duly executed
in acknowledgment of the payment.
4. It was stipulated in the Agreement to Sell that the balance
consideration would be paid to the sellers, on or before 05.09.2008. It was
further stipulated that if the seller failed to comply with the Agreement, then
he would be liable to pay double the amount of the earnest money/bayana to
the purchaser. Likewise, if the purchaser failed to comply with the
Agreement, then the said amount would be forfeited by the seller, and the
purchaser would have no claim or objection whatsoever, in respect thereof.
5. The Plaintiff asserted that before 05.09.2008, she requested the
Defendants on several occasions, to provide her with copies of the title
documents in respect of the suit property, so that the title could be verified.
However, despite repeated requests, the Defendants failed to produce the
Signature Not Verified
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By:VIKAS ARORA
Signing Date:27.10.2026
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RFA 814/2026 Page 3 of 16

title documents. Therefore, the Plaintiff did not consider it prudent to pay
the balance sale consideration of Rs. 36,00,000/-.
6. Thereafter, the Plaintiff sought refund of double the earnest money,
i.e., Rs. 8,00,000/-, from the Defendants on account of their failure to abide
by the terms of the Agreement to Sell, inasmuch as they failed to produce
the title documents. She also requested the Property Dealer, who had
negotiated the deal, to ensure that either the money was refunded or, if the
Defendants had title to the suit property, the property be transferred in her
name. However, on 15.04.2009, the Property Dealer conveyed to the
Plaintiff that the Defendants were not willing to abide by the terms of the
Agreement to Sell, dated 21.06.2008.
7. Consequently, the Plaintiff filed the Suit for Recovery of Rs.
8,00,000/-, i.e., double the earnest money, along with interest @ 12%
p.a.
8. The Defendants, in their Written Statement , admitted that the
Agreement to Sell dated 21.06.2008 was duly executed between the parties.
However, it was claimed that it was the Plaintiff who failed to honour the
terms of the Agreement to Sell, by failing to pay the balance sum of Rs.
36,00,000/-. Consequently, the Defendants forfeited the bayana amount.
9. It was further stated that the Defendants, as a follow-up to the
transaction with the Plaintiff, had entered into an Agreement to Sell and
Purchase with one Mr. Paramjeet Singh for the purchase of another property,
using the sale proceeds to be realised from the sale of the suit property to the
Plaintiff.
10. After receiving Rs. 4,00,000/- from the Plaintiff, Defendant No. 1
paid a bayana amount of Rs. 4,60,000/- to Mr. Paramjeet Singh. However,
Signature Not Verified
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Signing Date:27.10.2026
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the Defendants were unable to finalise the deal, because of the Plaintiff’s
failure to abide by the Agreement to Sell. Consequently, the bayana amount
paid by Defendant No. 1 to Mr. Paramjeet Singh was forfeited, by the latter.
It was thus, asserted that there was no merit in the Suit filed by the Plaintiff,
which was liable to be dismissed.
11. Issues on the pleadings, were framed on 16.03.2012, as under:-
(i) Whether the defendant failed to show the titled
documents of property No.6/2, Second Floor with roof
right, Ramesh Nagar, Delhi to the plaintiff? OPP

(ii) Whether the plaintiff is entitled to recover double
of the earnest money paid by him for purchase of above
property. OPP?

(iii) Whether the defendant informed the plaintiff that
they are entered to agreement to purchase another
property from Pramjeet Singh and consequently time was
the essence of the contract. OPD?

(iv) Whether the defendant forfeited the earnest money.
OPD?
(v) Whether the suit is barred by limitation. OPD?
(vi) Whether the plaintiff is entitled to interest pendent-
lite and future interest? If so, at what rate.

(vii) Relief.

12. The Plaintiff, in support of her case, examined herself as PW-1 and
produced the Agreement to Sell, Ex. PW-1/1, and the receipt, Ex. PW-1/2.
Signature Not Verified
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13. PW-2, Mr. Rajender Bali, was an attesting witness to the
Agreement to Sell, who corroborated the evidence of the Plaintiff, about the
execution of Agreement to Sell, between the parties.
14. PW-3, Mr. Ranjeet Singh, her husband, in his affidavit of evidence
Ex. PW-3/A, corroborated the testimony of PW-1. PW-2, Mr. Rajender Bali,
was the attesting witness to the Agreement to Sell, and deposed
15. Defendant No. 1, Mr. Somnath Kharbanda, tendered his evidence
by way of affidavit, but his cross-examination could not be completed as he
died during the pendency of the trial.
16. DW-1A, Ms. Parveen Rani, the wife of Defendant No. 1, was
dropped from the list of witnesses, vide Order dated 28.05.2025.
17. DW-1B, Ms. Kavita Kharbanda, and DW-1C, Mr. Gagan
Kharbanda, corroborated the defence set up in the Written Statement. The
copy of the registered GPA executed by Mr. Jai Prakash and Mr. Girish
Kumar in favour of Mr. Somnath Kharbanda and Mr. Roop Kharbanda was
marked as Mark A, while the registered Agreement to Sell and Purchase
executed by them in favour of Mr. Somnath Kharbanda and Mr. Anoop
Kharbanda, was marked as Mark B.
18. The learned District Judge, on appreciation of the evidence, held
that the execution of the Agreement to Sell dated 21.06.2008 Ex. PW-1/1
and payment of Rs. 4,00,000/- as bayana, evidenced by the receipt Ex. PW-
1/2, were admitted.
19. The contention of the Plaintiff that after the execution of the
Agreement to Sell, the Defendants had failed to produce the title documents
for verification, was not accepted by the learned Trial Court, and it was held
that the Plaintiff was not entitled to recovery of double the earnest money.
Signature Not Verified
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Signing Date:27.10.2026
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20. It was further observed that the Plaintiff had failed to produce any
document to establish her financial capacity. Rather, an Application under
Section 149 CPC had been filed for enlargement of time to pay the court
fees, indicating that the Plaintiff was facing financial difficulty. It was
further observed that the Plaintiff had failed to establish her readiness and
willingness to perform the Agreement to Sell, as the balance sale
consideration was not readily available with her by the stipulated date.

21. It was further noted that the Defendants had taken the defence that
they had suffered a loss because the proposed purchase transaction with Mr.
Paramjeet Singh could not be completed on account of the Plaintiff's failure
to abide by the Agreement to Sell, and that the earnest money paid by them
in that transaction, had been forfeited. However, the learned Trial Court
rejected this defence, and held that the Defendants could not be said to have
rightly forfeited the earnest money paid by the Plaintiff.
22. It was thus, held that the Plaintiff and her legal representatives were
entitled to recover Rs. 4,00,000/- paid as bayana, under the Agreement to
Sell dated 21.06.2008. Consequently, the Suit of the Plaintiff was partly
decreed for Rs. 4,00,000/-, along with pendente lite and future interest @
6% p.a.
23. Aggrieved by the Judgment and Decree, the legal representatives of
the deceased Defendants have filed the present Appeal.
24. The grounds of challenge are that the learned Trial Court travelled
beyond the pleadings and the Issues framed on the pleadings. There was no
specific issue framed regarding the ownership or validity of the title
documents of the Appellants. Therefore, the observations in this regard
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Signing Date:27.10.2026
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introduced a new question, which neither arose from the pleadings nor
formed part of the Issues framed on 16.03.2012.
25. It is further contended that the learned Trial Court failed to appreciate
that the Suit was merely for recovery of double the earnest money and not
for a declaration regarding the title of the Appellants. It was asserted that no
relief can be granted on a case that has not been pleaded, and that no
evidence can be considered, in respect of such a case.
26. Neither in the Plaint nor in the evidence, had the Plaintiff challenged
the legality or enforceability of the title documents of the Defendants and,
therefore, the findings in regard thereto, are liable to be set aside. The
reliance placed by the learned Court on Shakeel Ahmed vs. Syed Akhlaq
Hussain , 2023 SCC Online SC 1526, was totally misconceived and not
applicable to the facts, since this is not a Suit for Declaration of title or
specific ownership rights.
27. Reliance is also placed on Bachhaj Nahar vs. Nilima Mandal , 2008
INSC 1072; Rohit Singh vs. Parimal Bhattacharjee , 2024 DHC 8175;
Trojan & Co. vs. Nagappa Chettiar , (1953) 1 SCC 456; Krishna Priya
Ganguly vs. University of Lucknow , (1984) 1 SCC 307; Om Prakash vs.
Ram Kumar , AIR 1991 SC 409; Bharat Amratlal Kothari vs. Dosukhan
Samadkhan Sindhi, (2010) 1 SCC 234; Fertilizer Corp. of India Ltd. vs.
Sarat Chandra Rath , AIR 1996 SC 2744.
28. The learned Trial Court observed that, admittedly, the Agreement to
Sell dated 21.06.2008 was executed after the Plaintiff had understood the
nature of the documents and the possession of the suit property. It was also
observed that it was not believable that a person would enter into an
Agreement to Sell in respect of the suit property and a payment of Rs.
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4,00,000/- would be made, without verifying its ownership documents.
Moreover, the Plaintiff had neither raised any objection in regard to the title
of the Defendants at the time of execution of the Agreement to Sell nor
thereafter. The burden of proving Issue No. 1 lay on the Plaintiff, who failed
to discharge it. It is contended that, once the foundation of the Suit itself
stood demolished, no decree for recovery of Rs. 4,00,000/- could have been
passed in favour of the Plaintiff.
29. It is asserted that the Plaintiff never sought cancellation of the
Agreement to Sell dated 21.06.2008 and the terms of the Agreement
continued to bind the parties. The earnest money had been validly forfeited
as the Plaintiff had defaulted in performing the essential terms of the
Agreement to Sell.
30. The Appellants further contended that the learned Trial Court failed to
consider the provisions of the Transfer of Property Act, which do not
require the seller to have perfect title to the suit property at the time of
entering into an Agreement to Sell, as the title is required to be conveyed at
the time of execution and registration of the Sale Deed. It is contended that,
despite returning findings in favour of the Appellants/Defendants and noting
the Plaintiff's lack of readiness and willingness, the learned Trial Court
erroneously directed refund of Rs. 4,00,000/-.
31. It is further contended that the Plaintiff failed to pay the balance sale
consideration of Rs. 36,00,000/- and that the Defendants had, therefore,
rightly forfeited the earnest money, in terms of Clause 5 of the Agreement
dated 21.06.2008. It is further contended that Defendant No. 1 had entered
into an Agreement to purchase another property from Mr. Paramjeet Singh,
Signature Not Verified
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Signing Date:27.10.2026
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but that transaction could not be completed, on account of the Plaintiff's
non-performance of the Agreement to Sell.
32. The Appellants have placed reliance on K.R. Suresh v. R. Poornima &
Ors., 2025 INSC 617, wherein the Supreme Court held that, in a Suit for
Specific Performance, the relief of refund of earnest money cannot be
granted, unless it is specifically claimed in the Plaint or sought by way of
amendment. In the absence of such a specific prayer, the Court cannot suo
motu grant the relief .

33. In the present case, the time was the essence of the Agreement to Sell,
in view of the specific terms and stipulations contained therein. The Plaintiff
had failed to establish readiness and willingness to perform her part of the
Agreement to Sell. Since the Plaintiff had not sought a Declaration or
challenged the validity of the title documents, the learned Trial Court could
not have adjudicated upon their validity and thereby travelled beyond the
pleadings to grant the suo motu relief . The Appellants, therefore, prays for
the setting aside of the impugned Judgment and Decree.

Submissions heard and the record perused.
34. It is an admitted fact that the parties entered into an Agreement to Sell
dated 21.06.2008 Ex. PW-1/1 and that the Plaintiff had paid Rs. 4,00,000/-
as bayana , vide Receipt Ex. PW-1/2 , under the Agreement. It is also not in
dispute that, under the terms of the Agreement to Sell, the balance sale
consideration of Rs. 36,00,000/- had to be paid on or before 05.09.2008,
which admittedly remained unpaid.
35. The Plaintiff had sought recovery of Rs. 8,00,000/-, being double the
earnest money of Rs. 4,00,000/- paid by her under the Agreement to Sell, on
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Signing Date:27.10.2026
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the ground that the defendant defaulted in performance of the Agreement to
sell. In order to consider her entitlement, it became pertinent to decide which
party had committed the default.
36. The main contention of the Plaintiff was that the title documents were
not shown at the time of entering into the Agreement and even thereafter,
which dissuaded her from continuing with the deal. The ld. Trial Court, on
appreciation of evidence, rightly held that it was not believable that a person
entering into an Agreement and paying Rs.4,00,000/-, would not first see the
documents of title.
37. The Ld. trial Court further went into the financial capacity of the
Plaintiff to pay the balance sale consideration of Rs. 36,00,000/- by
05.09.2008, the stipulated date for payment of the balance sale
consideration, though it was not required, as the more relevant aspect was
whether the Defendants had a right to forfeit the earnest money
(bayana).
38. In this context, it is relevant to state the law on the subject.
39. Section 74 of the Indian Contract Act, 1872 reads as under:
“74. Compensation for breach of contract where penalty
stipulated for.- When a contract has been broken, if a sum is
named in the contract as the amount to be paid in case of
such breach, or if the contract contains any other
stipulation by way of penalty, the party complaining of the
breach is entitled, whether or not actual damage or loss is
proved to have been caused thereby, to receive from the
party who has broken the contract reasonable compensation
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not exceeding the amount so named or, as the case may be,
the penalty stipulated for.”
40. A plain reading of Section 74, makes it evident that the sum stipulated
in the contract does not become automatically recoverable, merely upon
proof of breach. The aggrieved party is entitled only to “ reasonable
compensation” not exceeding the sum named or the penalty stipulated. The
Constitution Bench of the Supreme Court in Fateh Chand v. Balkishan Das ,
(1964) 1 SCR 515, held that the words “whether or not actual damage or
loss is proved” merely dispense with proof of the precise quantum of loss,
and does not dispense with the existence of legal injury. Section 74 “ does
not justify the award of compensation when in consequence of the breach no
legal injury at all has resulted”.
41. The principles were comprehensively re-stated by the Supreme Court
in Kailash Nath Associates v. Delhi Development Authority , (2015) 4 SCC
136, wherein it was held as under:
“43.3. Since Section 74 awards reasonable compensation
for damage or loss caused by a breach of contract, damage
or loss caused is a sine qua non for the applicability of the
Section.
…
43.6. The expression „whether or not actual damage or loss
is proved to have been caused thereby‟ means that where it
is possible to prove actual damage or loss, such proof is
not dispensed with. It is only in cases where damage or loss
is difficult or impossible to prove that the liquidated amount
named in the contract, if a genuine pre-estimate of damage
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or loss, can be awarded.
43.7. Section 74 will apply to cases of forfeiture of earnest
money under a contract. Where, however, forfeiture takes
place under the terms and conditions of a public auction
before agreement is reached, Section 74 would have no
application.”

42. Thus, the forfeiture of earnest money paid under an Agreement to
Sell, is not an automatic consequence of breach. The amount named in the
contract, only defines the outer limit of compensation . The party seeking to
retain it, must establish that legal injury has resulted from the breach, and
where the loss is capable of proof, it must be proved.
43. In the present case, Clause 5 of the Agreement to Sell dated
21.06.2008 stipulated that the purchaser would forfeit the bayana in the
event of her default, and that the seller would pay double the bayana in the
event of his default. It is thus, a sum agreed in the contract, to be paid in
case of breach, which squarely falls within the ambit of Section 74.
44. Pertinently, the Defendants sought to prove the loss and damage
caused to them on account of non-performance of contract, by asserting that,
the defendant had entered into a forward transaction to purchase another
property from Mr. Paramjeet Singh and paid the bayana of Rs. 4,60,000/-,
which he lost as he was unable to complete his deal, as a consequence of the
Plaintiff’s default, and lost his Rs. 4,60,000/-, which was forfeited by Mr.
Paramjeet Singh.
45. Although the defendant had made these assertions on oath, but the
Receipt and Agreement to Sell were de-exhibited, as the defendant failed to
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produce the original documents. No other cogent evidence was led to
establish that the Defendants had entered into a further Agreement to Sell
with Mr. Paramjeet Singh or the reasons for its non-performance.
46. The loss so pleaded, was neither difficult nor impossible to prove; it
was capable of being established by documentary evidence and by
examining Mr. Paramjeet Singh. The Defendants, therefore, failed to lead
any cogent evidence to show that they had suffered any loss in terms of
Section 73 of the Indian Contract Act. Therefore, the learned District Judge
was justified in directing the refund of Rs. 4,00,000/- to the Plaintiff.
47. Much was agitated by the Appellants that the learned Trial Court had
made certain observations regarding the title of the Appellants/Defendants,
although the validity of the title documents, was not specifically in issue.
48. The learned Trial Court considered the Plaintiff’s contention that the
Defendants were not the owners of the suit property, as they failed to
produce the title documents and merely had an Agreement to Sell and no
Sale Deed in their favour, while examining her explanation that she had not
proceeded with the transaction because the Defendants had failed to produce
the title documents. The learned Trial Court did make observations
regarding the legal effect of the documents relied upon by the Defendants,
but it was not any findings on the title of the Defendant; the observations
were confined to adjudicate whether the plaintiff was justified in rescinding
the Agreement to Sell and was not a finding on the title of the defendant
over his property. Such observations were only incidental and not on the
merits.
49. It has also been contended that the question of readiness and
willingness was not relevant , as the present Suit was not one for specific
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Performance of the Agreement to Sell. However, as is evident from the
impugned Judgment, the reference to the Plaintiff’s readiness and
willingness was made, while examining her conduct and the parties’
respective obligations under the Agreement to Sell, and not to adjudicate a
claim for Specific Performance, which was not the relief sought in the Suit.
50. The other contention raised by the Appellants is that the relief of
refund of earnest money has been granted, despite there being no specific
prayer in this regard. However, this contention is absolutely fallacious for
the simple reason that the Plaintiff had not filed a Suit for Specific
Performance, but had merely sought recovery of Rs. 8,00,000/-, i.e. double
the amount of earnest money paid by her. It was a simpliciter Suit for
Recovery of bayana amount, which had to be decided in terms of the law
relating to the forfeiture of the amount paid under the Agreement to Sell.
51. Therefore, it is evident that the Defendants could have forfeited the
bayana, only if they were able to establish that they had suffered a loss on
account of non-performance of the Agreement to Sell. The principle laid
down in K.R. Suresh v. R. Poornima & Ors. , 2025 INSC 617, regarding the
requirement of a specific prayer for refund under Section 22(2) of the
Specific Relief Act, 1963, is applicable only in Suit was not one for Specific
Performance. The Trial Court awarded Rs. 4,00,000/- against the monetary
claim of Rs. 8,00,000/- made in the Suit, and did not grant an unclaimed
alternative relief in a Suit for Specific Performance.
52. It was a simpliciter Suit for Recovery of bayana amount, which had to
be decided in terms of the law relating to the forfeiture of the amount, paid
under the Agreement to Sell.

Signature Not Verified
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Signing Date:27.10.2026
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Conclusion:
53. The aforesaid discussion reveals that there is no merit in the Appeal,
which is hereby, dismissed.
54. The pending Applications are also disposed of, accordingly.

(NEENA BANSAL KRISHNA)
JUDGE
OCTOBER 27, 2026/RS
Signature Not Verified
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By:VIKAS ARORA
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