Court finds plaintiff failed to prove continuous readiness and willingness to perform contract; rejects claim for double earnest money despite contract clause
In a significant judgment dated October 16, 2026, the Delhi High Court dismissed the appeal filed by Ram Pal Saini seeking specific performance of an Agreement to Sell dated November 1, 2007, involving a property at Village Shalimar, Delhi. The Court upheld the decision of the Additional District Judge (ADJ) who had earlier refused the specific performance claim but ordered the refund of Rs. 4,15,000 paid by the plaintiff along with interest at 6% per annum.
The dispute arose when Ram Pal Saini (plaintiff) entered into an Agreement to Sell with Anil Kumar (defendant) for a property worth Rs. 30 lakh. The plaintiff paid earnest money and part payments totaling Rs. 4,15,000 but the sale deed was never executed. The plaintiff alleged readiness and willingness to pay the balance amount and perform his contractual obligations. However, the defendant contended that the plaintiff had terminated the agreement in January 2012 and was not ready with the full sale consideration.
The trial court, after examining evidence including payment receipts, bank statements, and pleadings, concluded that the plaintiff failed to prove continuous readiness and willingness to perform the contract. The bank statements produced covered only a period after the suit was filed and did not establish financial capacity during the critical earlier period. The plaintiff also failed to demonstrate that he had requested execution of the sale deed or called upon the defendant to get the property mutated as per the agreement conditions.
The Court noted that while the Agreement to Sell acknowledged a probate litigation over the property, the probate and subsequent appeal were decided in favor of the defendant before the plaintiff's last payments in 2011. Thus, no legal impediment prevented the execution of the sale deed after that point. The Court also observed that the possession clause in the agreement did not make physical possession a condition precedent for sale deed execution.
Regarding the earnest money and part payments, the Court referred to Sections 73 and 74 of the Indian Contract Act, 1872, and relevant Supreme Court precedents, highlighting that forfeiture of earnest money is not automatic. Since the agreement did not contain a clause allowing forfeiture of earnest money or part payments on purchaser default, and the defendant failed to prove any loss caused by breach, he was not entitled to retain the Rs. 4,15,000. The plaintiff was accordingly entitled to a refund with interest. The claim for double the amount paid, as stipulated in the agreement if the seller failed to honor the contract, was rejected as the plaintiff did not prove any loss beyond deprivation of the money paid.
The Court emphasized the dual aspects of readiness and willingness required for specific performance. "Willingness" relates to the plaintiff's state of mind and conduct, while "readiness" concerns financial capacity, which must be proved by cogent evidence. Mere assertions or mechanical reproduction of statutory language in the plaint are insufficient. The judgment reiterates that the burden lies on the plaintiff to prove both elements continuously from the date of agreement execution till decree.
Rejecting the appeal, the Delhi High Court affirmed the trial court's decree directing the refund of Rs. 4,15,000 with interest but denying specific performance and the claim for double the amount. The judgment serves as a caution to purchasers in property transactions to maintain clear, consistent proof of readiness and willingness to perform contracts to succeed in claims for specific performance.
Bottom Line:
Specific performance - Plaintiff must prove continuous readiness and willingness, including financial capacity, by cogent evidence - Mere assertion in plaint is insufficient - Where purchaser fails to prove readiness and willingness, specific performance is liable to be refused - In absence of contractual forfeiture clause and proof of loss, seller cannot forfeit earnest money/part payments and purchaser is entitled only to refund with interest, not double the amount.
Statutory provision(s):
Specific Relief Act, 1963 Section 16(c), Section 20, Section 22; Indian Contract Act, 1872 Sections 73, 74; Civil Procedure Code, 1908 Section 96
Ram Pal Saini v. Anil Kumar, (Delhi) : Law Finder Doc Id # 2998932
