Ram Pal Saini vs Anil Kumar
- Court
- Delhi High Court
* IN THE HIGH COURT OF DELHI AT NEW DELHI
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% Reserved on: 06 August,2026
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Pronounced on 16 October, 2026
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Uploaded on: 16 October, 2026
# CNR No. DLHC010294302021
+ RFA 330/2021 &CM APPL. 32746-32747/2021
SHRI RAM PAL SAINI (AGED ABOUT 70 YEARS),
S/o Late Shri Jug Lal
R/o 254, Village Shalimar,
Delhi-110088 .....Appellant
Through: Mr. T S Ahuja, Mr. Varun Ahuja, Ms.
Yukta Batra, Ms. Yashika Suneja,
Advocates.
versus
SHRI ANIL KUMAR
S/o Late Shri Ganga Ram
R/o House No.133, Village Shalimar
Delhi -110088 .....Respondent
Through: Ms Tanvi Madan, Advocate.
CORAM:
HON'BLE MS. JUSTICE NEENA BANSAL KRISHNA
J U D G M E N T
NEENA BANSAL KRISHNA, J.
1. The present Regular First Appeal under Section 96 of the Code of
Civil Procedure, 1908 (hereinafter referred to as „CPC‟) has been filed on
behalf of the Plaintiff/Appellant, Sh. Ram Pal Saini, against the Judgment
and Decree dated 30.10.2019 , whereby the learned Additional District Judge
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has directed the refund of Rs. 4,15,000/- along with interest at the rate of 6%
per annum, paid by the Plaintiff pursuant to the Agreement to Sell dated
01.11.2007, in the favour of the Plaintiff.
2. The Plaintiff filed the Suit Bearing CS No. 578170/2016 for Specific
Performance of Agreement to Sell dated 01.11.2007 and in the alternative
recovery of Rs. 8,30,000/- , being double the amount paid under the
Agreement to Sell .
3. The facts in brief , as stated in the Plaint , are that the Plaintiff entered
into an Agreement to Sell dated 01.11.2007 with the Defendant, for the
purchase of the property bearing No. 258, Village Shalimar, Delhi
(hereinafter referred as the “suit property”) admeasuring 300 sq. yards, for
a total sale consideration of Rs. 30,00,000/- . The Plaintiff paid a sum of Rs.
2,00,000/- as earnest money and Rs. 1,00,000/- twice vide Receipt dated
03.11.2007 and 09.01.2008 .
4. The Plaintiff also paid Rs. 50,000/- vide Receipt dated 15.04.2008 for;
Rs. 65,000/- vide Receipt dated 20.06.2011 ; and for Rs. 1,00,000/-vide
Receipt dated 25.08.2011 . The Plaintiff asserted that vide these three
Receipts, he further made a payment of Rs. 2,15,000/-. Also, the Defendant
had sought extension of time for completion of sale, through these Receipts.
5. The Plaintiff stated that both the Parties had agreed that rest of the
payment will be made to the Defendant within six months of the suit
property being mutated by the Defendant in his favour. The Plaintiff kept on
waiting for the Defendant to get the property mutated in his name, but the
Defendant failed to inform till date as to whether the property has been
mutated in Defendant’s favour or not.
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6. The Plaintiff approached the Defendant several times for completion
of the terms of the Agreement to Sell and made several personal, as well as,
telephonic request for compliance of Agreement to Sell dated 01.11.2007 .
The Plaintiff had even informed the Defendant that a payment was lying
ready with him, for getting the Sale Deed executed.
7. However, the Defendant informed the Plaintiff that the Probate
proceedings bearing PC No. 40 of 2006 was initiated by him in the Court of
learned ADJ, Delhi, in respect of the suit property. One Smt. Beena Devi had
filed the Objections in the Probate Petition and an interim injunction had
been granted restraining the Defendant from creating third party interest in
the suit property. The Defendant, therefore, informed the Plaintiff that since
the suit property is in dispute and there was an interim injunction , the Sale
Deed cannot be executed and hence, sale cannot be completed.
Subsequently, the Probate Petition was decreed in favour of the Defendant,
vide order dated 16.04.2007 , against which an Appeal was preferred by Smt.
Beena Devi, in which similar injunction order, was passed.
8. On account of the Appeal, the suit property cannot be mutated nor the
Sale Deed could be executed. The Appeal was decided in the favour of the
Defendant, despite which he avoided executing the Sale Deed, on one
pretext or the other.
9. The Plaintiff claimed that he had already arranged the money and was
losing interest on the said amount. The Plaintiff had always being ready and
willing to perform his part of the contract. The Plaintiff sent Legal Notice
dated 24.05.2013 to the Defendant, to which the Defendant sent a false and
malafide Reply dated 30.05.2013 .
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10. The Plaintiff thus, filed a Suit for Specific Performance of
Agreement to Sell dated 01.11.2007 and for directing the Defendant to
accept the balance sale consideration of Rs. 25,85,000/- and to transfer the
suit property, as per the terms of the Agreement to Sell dated 01.11.2007, in
favour of the Plaintiff and hand over the vacant and peaceful possession of
the suit property to the Plaintiff or in the alternative, without prejudice, the
Plaintiff sought an alternative relief for refund of Rs. 8,30,000/- i.e . the
double the amount paid under the Agreement to Sell along with the interest
@ 15% per annum from 01.11.2007, till the payment was made.
11. The Defendant/Respondent, Sh. Anil Kumar, in his Written
Statement took the preliminary objections that when the Defendant asked
him to pay the balance sale consideration and complete the sale, the Plaintiff
himself in January, 2012 asked the Defendant to return the earnest money
and terminate the Agreement to Sell dated 01.11.2007 . The Defendant
claimed that there exists no enforceable agreement between the Parties
since, the Agreement to Sell has been already terminated by the Plaintiff.
12. The Defendant asserted that the Appeal against grant of Letter of
Administration was decided in his favour and the Interim Order passed
therein, came to an end on 14.12.2010 with the dismissal of FAO No. 130 of
2008, by this Court. The Plaintiff thereafter, for a period of more than 2½
years did not take any action, despite the repeated requests of the Defendant
for the completion of the sale. The Defendant asserted that the sudden
interest of the Plaintiff in the suit property is, because of the manifold
increase in the price of real estate in the locality.
13. On merits , the Defendant admitted that the Agreement to Sell dated
01.11.2007 was executed inter se the Parties, but it was reiterated that the
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Agreement to Sell was terminated by the Plaintiff himself in January, 2012
and the Defendant was asked to return the earnest money . After 14.12.2010 ,
there was no restraint on the Defendant for transferring the suit property. It
was asserted that if the Plaintiff intended to pay the balance sale
consideration, there was nothing which prevented him from doing so.
14. The Defendant claimed that the Plaintiff did not have arrangement of
the entire balance consideration and wanted to pay the remaining
consideration in parts, to which the Defendant did not agree. Consequently,
the Plaintiff terminated the Agreement to Sell and showed his unwillingness
to perform the Agreement.
15. The Defendant asserted that after 14.12.2010 , there was no restraint
on the Defendant to transfer the suit property, therefore the assertion made
by the Plaintiff that the Defendant sought extension of time for the
completion of the sale, was denied.
16. The Defendant asserted that since he was not highly literate and was
not aware of the authority and the procedure for getting the suit property
mutated, he had requested the Plaintiff several times to help him in getting
the suit property mutated in the records of the relevant authority, but he
flatly refused nor informed the Defendant, about the concerned authority.
17. The Defendant denied that the Plaintiff approached the Defendant
repeatedly and made requests personally or through telephone, to get the
Agreement to Sell dated 01.11.2007 executed. The Defendant claimed that
the Plaintiff’s assertion are, in fact, contrary to assertion in Plaint that he
was waiting for Defendant to get the property mutated, in his name . The
Defendant further asserted that the Plaintiff had full knowledge of the
Appeal proceedings before this Court, as the Plaintiff and his son used to
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attend the hearings. Further, the counsel who represented the Defendant in
the proceedings before this Court, was arranged by the Plaintiff, and
therefore, the Plaintiff had knowledge about the dismissal of the Appeal on
14.12.2010 . It was thus, asserted that there was no merit in the Suit of the
Plaintiff and was liable to be dismissed.
18. The Plaintiff filed his Replication, wherein he re-affirmed the
averments made in the Plaint and denied the allegations made in the Written
Statement. The Plaintiff asserted that that he never terminated the
Agreement to Sell dated 01.11.2007 in January, 2012 and also that the
Defendant never intimated him about the dismissal of the Appeal.
19. The Plaintiff claimed that the Defendant had purchased court fee of
Rs. 70,040/- on 10.11.2007 and Rs. 3040/- on 28.03.2008 for Letter of
Administration, but was unable to obtain the same from the court as the
Objector, Smt. Beena Devi had filed the Appeal in this Hon’ble Court.
20. The Plaintiff asserted that the Letters of Administration were obtained
by the Defendant on 14.02.2011 and the possession of the suit property was
received by the Defendant from the Objector on 30.05.2013, through
Execution Proceedings. The Plaintiff asserted that no prudent person would
believe that the Defendant was unaware about the concerned office of the
mutation department, as the Defendant is a person who himself fights the
cases even before this Court.
21. It was denied that the Plaintiff and his son used to attend the
proceedings in this Court or that the Plaintiff had arranged a counsel for the
Defendant, to represent him. However, the Plaintiff admitted that he had
provided monetary help to the Defendant to defend the case and had also
borne the other expenses, as the Plaintiff was interested in purchasing the
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suit property, but neither the Defendant nor his counsel, informed him about
the outcome of the Appeal.
22. The Plaintiff asserted that as per the terms of the Agreement to Sell
dated 01.11.2007 , it was agreed between the parties that vacant and peaceful
possession of the property will be handed over at the time of the execution
of the Sale Deed. The vacant possession of the property was received by the
Defendant only on 30.05.2013 and thus, the sale deed should have been
executed within six months from 30.05.2013 , but the defendant declined to
execute the sale deed.
23. The following Issues were framed by the Learned ADJ , vide Order
dated 11.10.2017 :
1. Whether the Agreement dated 01.11.2007 was terminated by
the plaintiff himself, as alleged? OPD
2. Whether the plaintiff is/was ready and willing to perform
remaining part of the Agreement dated 01-11-2007? OPP
3. Whether the plaintiff is entitled to decree of specific
performance thereby directing the execution of sale deed
after receiving the balance consideration as claimed? OPP
4. Whether the plaintiff is entitled to decree of possession as
claimed? OPP
5. If the plaintiff is not found entitled to decree of specific
performance, then in the alternative whether he is entitled
for refund of the double of the amount paid to the defendant
with interest as claimed? OPP
24. The Plaintiff examined himself as PW-1 and tendered his evidence by
way of Affidavit. He reiterated the averments made in the Plaint. He proved
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the Agreement to Sell dated 01.11.2007 as EX-PW-1/1 ; receipts dated
03.11.2007, 09.01.2008, 15.04.2008, 20.06.2011 and 25.08.2011 as EX-
PW-1/2, EX-PW-1/3, EX-PW-1/4, EX-PW-1/5 and EX-PW-1/6
respectively. He also examined PW-2 , his brother Mr. Dharmpal Saini , who
was the attesting witness to the Agreement to Sell dated 01.11.2007 .
25. The Defendant examined himself as DW-1 and tendered his evidence
by way of Affidavit. He reaffirmed the defence taken by him, in the Written
Statement.
26. The learned ADJ, on appreciation of the evidence, vide Judgement
dated 30.10.2019 held that the Plaintiff was unable to prove his readiness
and willingness to perform the Agreement to Sell dated 01.11.2007 . The
Plaintiff failed to disclose the specific date and month when he made the
request to the Defendant for the execution of the sale deed. Moreover, in his
cross-examination, he admitted that he did not remember if he had made any
telephone call to the Defendant in this respect. It was also observed that the
Plaintiff had failed to explain why only part amount of Rs. 65,000/- vide
receipt dated 20.06.2011 and Rs. 1,00,000/- vide Receipt dated 25.08.2011
was paid to the Defendant, if he was ready with the entire balance sale
consideration amount on these two dates and why he had not asked the
Defendant to execute the sale deed in his favour.
27. The Plaintiff had not given the details of the available balance sale
consideration in the Plaint, but produced his Bank Statement from
02.05.2013 to 10.06.2013, in the cross-examination. However, he failed to
produce his Bank Statement for the period of 2011 and 2012, to corroborate
that he had the balance sale consideration ready for payment to the
Defendant.
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28. The learned ADJ further observed that the Plaintiff was unable to
explain his silence from 25.08.2011 i.e. date on which last payment of Rs.
1,00,000/- was made by him, till 24.05.2013 i.e. date on which the Legal
Notice was sent by him and as to why he had not taken any steps to get the
document executed, if he was having the balance consideration ready with
him. In these circumstances, the claim of the Defendant that the Plaintiff had
terminated the Agreement in January 2012, was accepted to be probable .
29. In view of the aforesaid, the learned ADJ concluded that the Plaintiff
was not ready and willing to perform his part of the Agreement and
consequently, was not entitled to a Decree of Specific Performance of the
Agreement to Sell dated 01.11.2007 .
30. The Plaintiff, in alternative relief, had sought Rs. 8,30,000/- i.e.
double the amount paid by him to the Defendant. However, the learned ADJ
decreed in the favour of the Plaintiff for refund of Rs. 4,15,000/- , which he
had paid to the Defendant under the Agreement to Sell, along with the
interest @ 6% per annum from the date of Notice i.e. 30.05.2013 till the date
of realisation.
31. Aggrieved by the impugned Judgment dated 30.10.2019 wherein the
claim of the Plaintiff for Specific Performance of the Agreement to Sell
dated 01.11.2007 was dismissed, the Plaintiff/Appellant preferred the
present First Regular Appeal.
32. The Plaintiff/Appellant was not aggrieved by the decision of grant of
the alternative prayer. In this Appeal, the Plaintiff has claimed that he was
entitled for the grant of the main relief of Decree for Specific Performance
of Agreement to Sell, dated 01.11.2007 .
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33. The first ground of challenge is that learned ADJ did not appreciated
the pleadings, evidence and other relevant provisions of law relating to
Specific Performance of Agreement, which were interpreted incorrectly. The
bonafide/ genuine claim of the Plaintiff has been rejected on the false,
frivolous and fictitious defence stated by the Defendant.
34. It was contended that there was specific admission of the Defendant
in his cross-examination, about the Plaintiff not having issued any Notice for
termination of Agreement to Sell or that Defendant had never sent any
Letter or served any Legal Notice on the Plaintiff for completion of the sale
of the suit property. Further, no notice of forfeiture of the earnest money
paid by the Plaintiff, had been issued by the Defendant.
35. It was proved from the evidence on record that there was never any
termination of contract at any point in time; much less in January 2012 as
alleged by the Defendant in his reply to the Legal Notice. The false
allegations of Defendant, have been taken as gospel true, which were against
the well-established principles of law, practice and procedure. The
observations made by the learned Trial Court was contradictory and
contrary to the records and was based on concoctions, conjectures and
surmises having nothing to do with the reality.
36. The second challenge is that the Issues No. 3 and 4 have been
decided on the basis of finding in Issues No. 1 and 2 in favour of the
Defendant, without assigning any reason whatsoever. It was contended that
the Plaintiff should have been granted the Decree of Specific Performance of
Contract in his favour and the impugned judgment is liable to be set aside.
37. The policy of pick and choose and approbate and reprobate has been
followed, in interpreting the terms and conditions of Agreement to Sell
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dated 01.11.2007 . There was no provision in Agreement to Sell regarding
forfeiture of the money paid by the Plaintiff and the claim of the Defendant
for forfeiture of the earnest money of Rs. 2,00,000/- and part payments of
Rs. 2,15,000/-, had been rightly declined.
38. The prayer of the Plaintiff for payment of double amount of Rs.
8,30,000/- had been claimed because it was specifically so provided in the
Agreement to Sell. The Defendant was, therefore, under a legal obligation to
pay double the amount paid by the Plaintiff.
39. The Plaintiff has relied on Satya Jain vs. Anis Ahmed Rushdie,
(2013) 8 SCC 131, K. Prakash v. B.R. Sampath, (2015) 1 SCC 597 and
Zarine Siddiqui v. A. Ramalingam, (2015) 1 SCC, wherein it has been held
that Section 20 of the Specific Relief Act provides that Courts with a
discretion to grant the relief of Specific Performance, but such discretion is
not to be exercised in an arbitrary manner; it must be exercised in
accordance with sound and reasonable judicial principles.
40. The fourth challenge is that the Plaintiff and the Defendant, were
neighbours, who were residing in the same Village, at a short distance from
each other. The Plaintiff had made part payments till the end of August,
2011 and there was no reason for the Plaintiff, to have terminated the
Agreement in January, 2012 and that too, without any written Notice or any
correspondence. The story of the Defendant that the Plaintiff himself had
cancelled the Agreement to Sell, is an afterthought and cooked-up story, to
run away from performing his part of the contract.
41. The fifth challenge is that the balance sale consideration, was to be
paid to the Defendant, within six months of the mutation of the suit property
in the name of the Defendant. Till date, the Defendant has not got the
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property mutated in his name. The learned ADJ , did not consider that the
Defendant himself has admitted that there was litigation ongoing in respect
of the suit property and the same could not be transferred in the name of the
Plaintiff, till the ongoing litigation was settled. If there would have been no
stay, then also the property could not have been transferred, on account of
the doctrine of Lis Pendens .
42. It was asserted that the learned ADJ wrongly held that that the
Plaintiff was required to prove that he had sale consideration ready in 2011
or 2012. The Defendant had received the possession of the suit property in
the end of May 2013 i.e. 30.05.2013 and even if the Plaintiff would have
sought possession on the execution of the Sale Deed, the Defendant would
not have been able to hand over the possession, since he himself was not in
possession till May 2013.
43. As per Clause 3 of the Agreement to Sell dated 01.11.2007 , the
Defendant had agreed to hand over the possession of the suit property to the
Plaintiff, at the time of execution of Sale Deed in favour of the Plaintiff.
When the Defendant came into the possession only in the end of May 2013,
he was not in a position to hand over the vacant possession of the suit
property to the Plaintiff, in 2011 or 2012. It was therefore, submitted that the
impugned judgement be set aside and he be granted Specific performance of
the Agreement to Sell.
44. The Written synopsis was filed by the Plaintiff/Appellant reiterating
the assertions made in the grounds of Appeal.
45. The Defendant/Respondent , in his Written Submissions , reiterated
the assertions made in the Written Statement. It was therefore submitted that
there is no merit in the Appeal, which is liable to be dismissed.
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Submissions heard and the record perused.
46. It is an admitted case of the parties that the Plaintiff entered into an
Agreement to Sell dated 01.11.2007, for purchase of the suit property. It is
also admitted that the following amounts were paid by the Plaintiff to the
Defendant:
Amount Vide Receipt dated As
Rs. 1,00,000 03.11.2007
Earnest Money
Rs. 1,00,000 09.01.2008
Rs. 50,000 15.04.2008
Part Payment
towards Balance
Rs. 65,000 20.06.2011
Consideration
Rs. 1,00,000 25.08.2011
Aggregate Payment Received: Rs. 4,15,000/-
Total Sale Consideration: Rs. 30,00,000/-
47. The first aspect for consideration is whether there was any
impediment to the execution of the Sale Deed . In this context, the Agreement
to Sell dated 01.11.2007 , EX-PW-1/1 may be considered, which was
admittedly entered into between the parties. It was clearly mentioned in this
Agreement to Sell that the Probate Case bearing PC No. 40 of 2006 in
respect of the Will dated 17.03.1999 , had been probated, vide Judgment
dated 16.04.2007 and the Probate had been granted in favour of Mr. Anil
Kumar, the Defendant . It was further noted that the Probate had been
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granted subject to filing of valuation report and requisite court fees and the
Administration Bond.
48. In this context, it would be pertinent to note that when the Parties
entered into the Agreement to Sell dated 01.11.2007 , the Probate Case
bearing PC No. 40 of 2006 had already been decided in favour of the
Defendant, of which, there is a mention in the Agreement to Sell itself.
However, the same was challenged by Smt. Beena Devi , by way of an
Appeal bearing FAO No. 130 of 2008 , which also got dismissed on
14.12.2010 . After the dismissal of the Appeal, the Letter of Administration
was issued in favour of the Defendant on 14.02.2011 . It is, therefore, evident
that after the dismissal of the Appeal on 14.12.2010 , there was no
impediment in the execution of the Agreement to Sell.
49. The second aspect is the Clause 5 of the Agreement to Sell dated
01.11.2007 , which mentioned that the Defendant had undertaken to get the
property mutated in his name before the execution of the Sale Deed, after
obtaining the necessary Letter of Administration/Probate from the Court.
Admittedly, the Defendant claimed that he was not aware about the
authority or procedure for the mutation of the suit property as he is not
highly literate; the property has not been mutated till date.
50. It is evident that the Plaintiff was aware of the dismissal of the Appeal
on 14.12.2010 and of the issuance of the Letter of Administration in favour
of the Defendant. He, in fact, thereafter made payment of Rs. 65,000/- and
Rs. 1,00,000/- on 20.06.2011 and 25.08.2011, respectively. However, there
is not a single notice or any evidence to show that the Defendant ever sought
the extension of time for the completion of the Sale Deed or the Plaintiff had
asked the Defendant to get the sale deed executed in favour of Plaintiff.
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Mere plea of ignorance by the Plaintiff of whether the suit property ever got
mutated in the name of the Defendant, cannot ensure to the Plaintiff’s
benefit considering that it the Plaintiff was aware of the dismissal of the
Appeal. The Plaintiff did not give any notice whatsoever to the Defendant,
for execution of the Sale Deed. Furthermore, even if the property was not
mutated, at least, the Plaintiff could have called upon the Defendant, to get it
mutated as part of the conditions stipulated in the Agreement to Sell dated
01.11.2007 .
51. The third aspect was that the possession of the suit property, was with
Smt. Beena Devi and the Defendant got the possession only on 30.05.2013 .
Pertinently, the Legal Notice had been issued by the Plaintiff, prior to the
said date i.e. on 24.05.2013 and therefore, his assertion that since the
possession was not with the Defendant, the same could not have been
executed, is without any merit. In this regard, it is also pertinent to produce
the relevant clause of Agreement to Sell, which reads as under:-
“And Whereas the said portion of the property No.258,
Village Shalamar, Delhi is in possession one Smt. Beena
and the First Party has instituted a suit for recovery of
possession against her which is pending in the court of
Shri Paramjit Singh, ADJ, Delhi. Thus the First shall
deliver the possession of the property after obtaining the
same from said Smt. Beena at his risk and
responsibility.”
52. From the bare reading of this Clause, it is evident that the handing
over of the physical possession, was not a condition precedent for execution
of the Sale Deed. The Clause merely provided that it would be the obligation
of the Defendant, to obtain the possession from Smt. Beena Devi and
thereafter, to hand it over to the Plaintiff. It cannot be overlooked that when
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the Plaintiff entered into this Agreement to Sell dated 01.11.2007 , he was
well aware of the litigation between the Defendant and Smt. Beena Devi, as
it clearly finds mention in the Agreement to Sell itself. Therefore, it is quite
evident from the Clause in regard to the possession, that the handing over of
physical possession, was no impediment or a pre-condition for the execution
of the Sale Deed.
53. The main element in the Agreement to Sell dated 01.11.2007 which is
required to be proved, is that the Plaintiff had readiness and willingness to
perform his part of the Agreement to Sell since the day of execution of this
Agreement to Sell, till the Suit has filed and even thereafter, till the Decree
of Specific Performance is passed, as has been held in the case of H.P.
Pyarejan v. Dasappa (Dead) By L.Rs. & Ors ., (2006) 2 SCC 496.
54. The averments in the Plaint as a whole, must clearly indicate the
readiness and the willingness. Section 16(c) of the Specific Relief Act, 1963
mandates the plaintiff not only to make averments in the plaint but also to
establish fact by evidence aliunde about his readiness and willingness to
perform the Contract.
55. The Legislature has chosen to use two phrases, namely “ readiness ”
and “ willingness ”. While the “ willingness ” indicates his state of mind which
is determined through the conduct of the plaintiff, the “ readiness ” indicates
the financial capacity of the plaintiff which is required to be proved through
evidence that he had the financial capacity to perform the Agreement.
56. In Syed Dastagir v. T.R. Gopalakrishna Setty , (1999) 6 SCC 337, the
Apex Court while construing the connotation of readiness and willingness,
observed that the compliance of “ Readiness and willingness has to be in
spirit and substance and not in letter and form. So to insist for mechanical
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production of the exact words of a statute is to insist for the form rather than
essence. So absence of form cannot dissolve an essence if already pleaded .”
It was also observed that the plea of readiness and willingness is not an
expression of art and science, but an expression through words to place fact
and law of one’s case for a relief. In order to gather true spirit behind a plea
it should be read as a whole and to test whether the plaintiff has performed
his obligations, one has to see the pith and substance of the plea.
57. The statute “specifically require a plea to be made in any particular
form, it can be in any form. No specific phraseology or language is required
to take such a plea .” Further, to establish “ readiness ”, the Plaintiff is
required to be proved through evidence that he had the financial capacity, as
has been explained in the case of K.V. Balan (Dead) Through Legal
Representatives v. Bhavyanath (supra) .
58. The connotation of readiness is not that the intending purchaser has
to produce the money or to vouch a concluded scheme for financing the
transaction; it is sufficient for the purchaser to establish that he has the
capacity to pay, as was explained in the case of Raghunath Rai & Another v.
Jageshwar Prashad Sharma , (1999) 50 DRJ 751.
59. The financial capacity has to be however, proved strictly and self-
serving statements cannot discharge the burden of proving existence of
financial capacity, as noted by this Court in the case of Baldev v. Bhule ,
(2012) 132 DRJ 247.
60. The Supreme Court in Madhukar Nivrutti Jagtap v. Pramilabai
Chandulal Parandekar, 2019 SCC OnLine SC 1026 held that the requirement
to prove readiness and willingness is not that the plaintiff should
continuously approach the defendant with payment or make incessant
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requests for performance. The requirement of readiness and willingness of
the plaintiff is not theoretical in nature, but is essentially a question of fact
which needs to be determined in reference to the pleadings and the evidence
led by the parties.
61. The aspects to be established for proving the readiness, are
crystallized, as under:
(i) It should be clearly stated it the Plaint that the plaintiff was, is
ready and also explain his financial capacity;
(ii) it is sufficient for the purchaser to establish that he has the
capacity to pay, and is not required to prove the ready cash in
hand; and
(iii) The financial capacity has to be however, proved strictly and
self-serving statements cannot discharge the burden of proving
existence of financial capacity.
62. In the present case, it would be pertinent to refer to the Plaint wherein
while the Plaintiff has asserted in Paragraph 6 of the Plaint that “ the
Plaintiff was waiting after arranging huge money and had been losing
interest on the said amount ”. Further, he stated that he has always been
ready and willing to perform his part of the contract and is still ready and
willing to perform his part of the contract. Mere mechanical reproduction of
the statutory language in the plaint does not suffice, but some details of the
availability should have been explained, which was significantly, missing.
63. The second aspect is whether the Plaintiff was also to corroborate and
prove his statement in the Plaint that he had a huge money ready on which
he was losing interest, and has also been deposed by him as PW-1 to the
same effect. The Plaintiff did not produce any cogent proof that he indeed,
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had the balance sale consideration amount in cash ready to pay to the
Defendant for execution of the Sale Deed.
64. The assertion of the Defendant is that the Plaintiff did not have the
requisite money, is proved from his bald assertion of losing interest on huge
amount, thereby implying that he was having money in cash, but the
Plaintiff did not disclose any source of money from where he had arranged
the balance sale consideration.
65. It is pertinent to note that it was only during the cross-examination,
the Plaintiff produced his Bank Statement, EX-PW-1/DX1 , which was for
the period 01.05.2013 to 12.06.2013 i.e. after the institution of the Suit on
09.07.2013 . While the Plaintiff may have been able to show that in May
2013, he had the requisite amount in the Bank vide Bank Statement, but the
Plaintiff was required to show his liquidity from the date of execution of the
Agreement to Sell dated 01.11.2007 or in any case, from December 2010
when the Appeal was dismissed and February, 2011 when Letter of
Administration was issued, in the favour of Defendant.
66. Thus, while it emerges that the Plaintiff evidently asserted that at the
time of institution of the Suit, Plaintiff was referring to cash, which he has
not been able to prove. During the evidence, he produced the Bank
Statement, but it was from after the institution of the Suit, thereby
confirming that he did not have the sufficient funds at the relevant time to
pay under the Agreement to Sell.
67. The Defendant had also asserted that, in fact, the Plaintiff was not
ready with the requisite money and had been requesting the Defendant to
accept the remaining consideration in parts, to which, the Defendant did not
agree and asked the entire sale consideration for execution of the Sale Deed.
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68. That the Plaintiff did not have the requisite money, is also established
from the fact that he paid Rs. 65,000/- and Rs. 1,00,000/- vide receipts dated
20.06.2011 and 25.08.2011 respectively. By then, the litigation had gotten
over and even the Letter of Administration had been issued to the Defendant
on 14.02.2011 . The very fact that he was making payments in instalments
despite all impediments being removed, also corroborates that the Plaintiff
indeed did not have the requisite balance sale consideration amount to pay to
the Defendant.
69. The learned ADJ , therefore, has rightly observed that the Plaintiff was
unable to prove his readiness and willingness to perform the Agreement to
Sell dated 01.11.2007 , which is a pre-requisite for any Suit for Specific
Performance to be decreed.
70. The Suit for Specific Performance has been rightly, dismissed.
71. The last aspect was the refund of the earnest money and part
payments of Rs. 4,15,000/- made by the Plaintiff under the Agreement to
Sell.
72. Section 22 of the Specific Relief Act, 1963 is as under:-
“22. Power to grant relief for possession, partition, refund of earnest
money, etc.—
(1) Notwithstanding anything to the contrary contained in the Code of
Civil Procedure, 1908 (5 of 1908), any person suing for the specific
performance of a contract for the transfer of immovable property
may, in an appropriate case, ask for—
(a) possession, or partition and separate possession, of the
property, in addition to such performance; or
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(b) any other relief to which he may be entitled, including the
refund of any earnest money or deposit paid or made by him,
in case his claim for specific performance is refused.
(2) No relief under clause (a) or clause (b) of sub-section (1) shall be
granted by the court unless it has been specifically claimed:
Provided that where the plaintiff has not claimed any such relief in
the plaint, the court shall, at any stage of the proceeding, allow him to
amend the plaint on such terms as may be just for including a claim
for such relief.
(3) The power of the court to grant relief under clause (b) of sub-
section (1) shall be without prejudice to its powers to award
compensation under section 21.”
73. The term “advance/part-payment” means money, in whole or in
part, forming part of the consideration of an Agreement, paid before the
same becomes fully payable. On the other hand, “ earnest money ” means a
sum of money given for the purpose of binding a contract, which is forfeited
in case the contract does not materialise.
74. In the case of Chiranjeet Singh vs. Har Swarup , AIR 1926 PC 1, the
nature of earnest money was explained in the terms, that it is part of the
purchase price when the transaction goes forward and it is forfeited when
the transaction falls through, by reason of the fault or failure of the
purchaser.
75. This concept of earnest money, was succinctly explained in the case
of Shree Hanuman Cotton Mills vs. Tata Air Craft Ltd. , (1969) 3 SCC 522,
as under:-
“21. …, the following principles emerge regarding “earnest”:
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(i) It must be given at the moment at which the contract is
concluded.
(ii) It represents a guarantee that the contract will be fulfilled or,
in the other words, “earnest” is given to bind the contract.
(iii) It is part of the purchase price when that transaction is carried
out.
(iv) It is forfeited when the transaction falls through by reason of
the default of failure of the purchaser.
(v) Unless there is anything to the contrary in the terms of the
contract, on default committed by the buyer, the seller is
entitled to forfeit the earnest.”
76. The Apex Court again in the case of Videocon Properties Ltd. vs.
Bhalchandra Laboratories , (2004) 3 SCC 711, examined the nature and
character of the earnest money deposit and observed that earnest money
fulfils a dual purpose; first , it operates as part-payment of the purchase price
and; secondly , as security for the performance of the contractual obligations.
Thus, its true character and purpose can only be examined on a close reading
of the agreement, and the relevant contextual factors. Further, the words
used in the agreement alone cannot be determinative of the true nature of the
amount advanced. Instead, the intention of the parties and the surrounding
circumstances serve as more appropriate indicators. The relevant
observations are reproduced herein below:
“14. […….] Further, it is not the description by words used in the
agreement only that would be determinative of the character of the
sum but really the intention of parties and surrounding circumstances
as well, that have to be looked into and what may be called an
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advance may really be a deposit or earnest money and what is termed
as “a deposit or earnest money‟ may ultimately turn out to be really
an advance or part of purchase price. Earnest money or deposit also,
thus, serves two purposes of being part-payment of the purchase
money and security for the performance of the contract by the party
concerned, who paid it.”
77. The three-judge Bench of the Apex Court in the Case of Central Bank
of India vs. Shanmugavelu , (2024) 6 SCC 641, reiterated the difference
between the “earnest money” and the “advance money”. It was held that if
earnest money is adjusted towards the sale consideration, it loses its
character of earnest money and becomes part-payment. It was held that the
earnest money can be treated as part-payment of sale consideration, only if
the contractual terms under the Agreement are honoured. An advance is a
part to be adjusted at the time of final payment. If the promisee defaults to
carry out the contract, he loses the earnest money, but may recover part
payment leaving untouched the promisor’s right to recover the damages.
78. From the admitted case, it has emerged in the present case that Rs.
2,00,000/- was paid under the Agreement to Sell, while Rs. 2,15,000/- was
paid from time to time, as part payment towards the balance sale
consideration, which was essentially advance money under the Agreement
to Sell.
79. Clause 2 of the Agreement to Sell read as under:
“That in case the First Party shall fail to honour its
commitment for sale of the property consequent to the
payments to be made by the Second Party within time in
terms of this Agreement, the First Party shall pay double the
amount of the earnest money to the Second Party and upon
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such payment the Second Party shall not be left with any
right, title, interest or claim qua the said property in any
manner whatsoever.”
80. The Agreement to Sell dated 01.11.2007 , Ex. PW-1/1 , does not
contain any stipulation for forfeiture of the earnest money or the part
payments in the event of default by the purchaser. The only stipulation in
regard to breach is that if the Defendant failed to execute the Sale Deed, he
would pay double the earnest money to the Plaintiff. There is, thus, no sum
named in the contract as payable by the Plaintiff in case of his breach. The
Defendant’s claim to retain the amount could, therefore, rest only upon
proof of the loss suffered by him in terms of Section 73.
81. Having so held, the next question that arises is whether the Defendant
is entitled to forfeit the entire amount. In this regard, it would be pertinent to
refer to Sections 73 and 74 of the Indian Contract Act, 1872, which read as
under:
“73. Compensation for loss or damage caused by breach of
contract.— When a contract has been broken, the party who suffers by
such breach is entitled to receive, from the party who has broken the
contract, compensation for any loss or damage caused to him thereby,
which naturally arose in the usual course of things from such breach,
or which the parties knew, when they made the contract, to be likely
to result from the breach of it.
Such compensation is not to be given for any remote and indirect loss
or damage sustained by reason of the breach.
…
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
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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 not
exceeding the amount so named or, as the case may be, the penalty
stipulated for. ”
82. A plain reading of Section 73 makes it evident that the party who
suffers by the breach is entitled to compensation only for the loss or damage
caused to him thereby. Section 74 further makes it evident that even where a
sum is named in the contract, it 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.
83. 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 do 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”.
84. The principles were comprehensively restated 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
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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 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. ”
85. Thus, the forfeiture of earnest money paid under an Agreement to
Sell, is not an automatic consequence of breach. Even the right of the seller
to forfeit the earnest money on the default of the purchaser, as recognised in
Shree Hanuman Cotton Mills (supra), is subject to Section 74. The amount
named in the contract operates only as 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.
86. In the present case, there is not an iota of evidence led by the
Defendant to show that on account of non-performance of the Agreement to
Sell, he suffered any loss. Rather, the Defendant himself asserted that the
price of real estate in the locality had increased manifold, and the suit
property continues to remain with him. Therefore, once there is no loss,
which has been shown to have accrued to the Defendant, he was not entitled
to forfeit the amount of Rs. 4,15,000/- that had been received by him under
the Agreement to Sell, whether as earnest money or as part payment.
87. Furthermore, the Defendant asserted that the Plaintiff had terminated
the contract orally in January, 2012 but there is not an iota of evidence to
corroborate his assertion. It is pertinent to note that had the contract been
terminated, there is no reason why the Plaintiff would not have sought
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recovery of the amount paid under the Agreement to Sell dated 01.11.2007 ,
or soon thereafter.
88. Furthermore, the Defendant, who has claimed that the contract stood
terminated, neither issued any letter nor informed the Plaintiff about the
alleged forfeiture of the money paid by the Plaintiff under the Agreement to
Sell. Therefore, it is clear that there was no termination of the
Agreement to Sell by the Plaintiff, as alleged by the Defendant. The
observation of the learned ADJ that the plea of termination in January, 2012
appeared probable, therefore, cannot be sustained.
89. Since the Agreement to Sell was never terminated, and the Defendant
has failed to establish either a contractual right of forfeiture or any loss
suffered by him, he cannot retain the amount received by him under the
Agreement to Sell dated 01.11.2007, which never fructified into a Sale
Deed. The Plaintiff is, therefore, entitled to the refund of Rs. 4,15,000/-.
90. The Plaintiff had, in the alternative, claimed Rs. 8,30,000/-, being
double the amount paid by him. In terms of Kailash Nath Associates (supra),
even the sum so named would operate only as the outer limit of reasonable
compensation, and the Plaintiff has neither pleaded nor proved any loss
beyond the deprivation of the money paid by him, which stands
compensated by the refund along with interest. The learned ADJ was,
therefore, justified in declining the claim for double the amount.
91. Therefore, the learned ADJ was right in decreeing the Suit in favour
of the Plaintiff, for refund of the amount of Rs. 4,15,000/- along with the
interest @ 6% p.a. from the date of Notice i.e. 30.05.2013 , till the date of
realisation.
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92. There is no merit in the present Appeal, which is hereby, dismissed
and disposed of accordingly .
93. The pending Applications are disposed of accordingly.
(NEENA BANSAL KRISHNA)
JUDGE
OCTOBER 16, 2026/ds/RS
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