Subhash Aggarwal Vs Mahender Pal Chhabra & Anr. (Supreme Court of India)
Specific Performance Denied but Equities Balanced: Supreme Court Awards ₹3 Crore in Lieu of Enforcement of Contract
The Supreme Court declined to grant specific performance of an agreement to sell, holding that the appellant failed to establish continuous readiness and willingness to perform his contractual obligations, particularly his financial capacity to pay the balance sale consideration on the stipulated date and his failure to appear before the Sub-Registrar. At the same time, the Court noted that the respondents were not blameless, having failed to complete essential formalities such as mutation and conversion of the property from leasehold to freehold.
Reiterating that specific performance is an equitable and discretionary relief, the Court held that there is no straitjacket formula for determining readiness and willingness, and the relief must be assessed on the totality of circumstances. Given the lapse of over seventeen years since execution of the agreement, the Court agreed that enforcement of the contract at this stage would be inequitable and impractical.
However, the Court disapproved the High Court’s direction permitting forfeiture of the earnest money, holding that such forfeiture would result in unjust enrichment where both parties were at fault. To do complete justice and restore balance between the parties, the Supreme Court modified the High Court’s judgment and directed the respondents to pay a lump sum of ₹3 crore to the appellant within four weeks, in substitution of specific performance.
The appeal was accordingly partly allowed, reaffirming that while equity may deny enforcement of a contract, it must still ensure fair restitution and prevent windfall gains to either party
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
