Raghbir Singh and Others v. Lalit and Others

IN T

Whether only oper Pronounced or the

Raghbir Singh a Lalit and Others

CORAM : HO

Present: Mr

Mr

For MANDEEP PA

1.

Raghbir Singh passed by the le 226/2019, wher by the plaintiff received as adva

2.

plaintiffs in the same judgment THE HIGH COURT OF PUNJ AT CHANDIGA -.-

RS

XO

Re

Pro

Up rative part of the judgment is e full judgment is pronounced:

and Others

VERSUS s

ON'BLE MS. JUSTICE MAND r. R.Kartikeya, Advocate for the r. Navjot Singh Wahniwal, Advo r the respondents (through V.C) -.-

ANNU, J. e present Regular Second Appe and others, assailing the judgm earned Additional District Judge reby the lower appellate Court p ffs and directed the appellant-ance, thereby modifying the find e cross-objections have been file original suit and respondents in and decree dated 30.04.2025

JAB AND HARYANA ARH SA-2934-2025 (O&M) with OBJC-19-2025 (O&M) served on:-19.12.2025 onounced on:- 08.01.2026 ploaded on:-09.01.2026 operative part/full judgment

....Appellants

....Respondents DEEP PANNU appellants. ocate eal has been filed by the appella ment and decree dated 30.04.20 , Faridkot in Civil Appeal No. C partly allowed the appeal prefer defendants to refund the amo dings of the trial Court. ed by Lalit and others, who are n the present RSA, challenging to the extent it declines relief

- ants CA-rred ount

declaration, per the lower appell

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By well as the cross Brief Facts

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and permanent

29.09.2012 exec to land measurin enforceable, fur interest, and als alienating the s plaintiffs.

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As sell the suit land and received ₹1 further paid ₹9,0 ₹13,00,000/-, ₹1 sale considerati would be paid whereafter the d Possession was works for reside PUDA approval kanals 6 marlas rmanent injunction, and seeking late Court. this common judgment, this Co s-objections. e plaintiffs filed the present suit injunction, seeking a declaratio cuted by defendants Rajpreet Si ng 165 kanals 3 marlas, in favou rther seeking recovery of the am o a decree of permanent injunct suit property in any manner to per the plaint allegations, the de d on 29.09.2012 for a sale cons 16,00,000/- at the time of agree 00,000/- on 04.10.2012, ₹30,00, 10,00,000/- by cheque and ₹23,0 ion. It was agreed that the rem d on 31.03.2013, and anothe defendants would execute and re delivered after harvesting and th ential colony, spending around l, but the process halted when P of land was under mortgage. De

g enhancement of relief granted ourt proposes to decide the RSA for declaration, recovery of mon on that the agreement to sell da ingh and Raghbir Singh in relat ur of the plaintiffs, stands valid mount paid along with damages tion restraining the defendants fr o any third person other than efendants executed an agreemen sideration of ₹58,80,000/- per ac ement as earnest money. Plaint ,000/- on 07.11.2012, ₹10,00,00 00,000/- on different dates towa maining amount of ₹1,50,00,00 er ₹1,50,00,000/- on 16.08.20 egister the sale deed by 31.07.20 he plaintiffs undertook developm ₹50,60,000/-. Plaintiffs applied PUDA raised an objection since espite repeated requests, defenda

- d by A as ney ated rom nt to cre, tiffs 00/-, ards 00/- 013,

¶014ment for e 83

did not clear loa defendants avoi were present be did not appear. issuance of lega

05.04.2015, defe compelling them

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In asserted that the the stipulated ti contract. They s and failed to ge that no signifi construction of forfeit earnest m before the Sub their presence b repayment of lo plaintiffs, but a entitled to relief

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Fro Trial Court:

¶1pra an or obtain 'No-Encumbrance' ided execution of sale deed, ev efore the Sub Registrar for paym A cheque issued by plaintiffs al notice by defendants forfeiting fendants allegedly demolished de m to file the suit. the written statement, the defe e plaintiffs had failed to pay the ime and were never ready and w submitted that plaintiffs did not et the sale deed executed on 29 icant development work was a gate, and due to non-paymen money. The defendants further p Registrar on 01.08.2014 from by way of affidavit, hence the pla oan, clearance certificate and c as plaintiffs failed to honour p f. om the pleadings of the parties, f Whether the plaintiffs are en ayed for? (OPP)

' Certificate. Plaintiffs claimed t ven on 01.08.2014, when plaint ment of balance amount, defenda was later dishonoured, leading g earnest money on 04.08.2014. evelopment work done by plainti endants denied the allegations e balance sale consideration wit willing to perform their part of t affix proper ad-valorem court .09.2012 as agreed. It was plead carried out by plaintiffs exc nt, the defendants had the right pleaded that they remained pres 9:00 AM to 5:00 PM and mark aintiffs alone were defaulters. A consent letter were handed over payment schedule, they were following issues were framed by ntitled to the relief of declaration

- that tiffs ants g to On iffs, thin fee ded cept t to sent ked After r to not n, as

¶2₹2,

¶3inju

4. (OP

¶5suit

¶6Findings of the

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parties, held tha perform their pa although part pa per the schedule lakhs and ₹23 plaintiffs admit payment was th issue any notice that plaintiffs specifically pro forfeited and the

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or recovery as t the earnest mon Whether plaintiffs 09,88,500/- along with interest, Whether the plaintiffs are e unction, as prayed for? (OPP) Whether proper court fee h PD) Whether the plaintiffs have n t? (OPD) Relief. e trial Court e Trial Court, after considering at the plaintiffs had failed to prov art of the agreement to sell date ayments were made, the plaintiff e fixed in the agreement, and ex lakhs, no subsequent payment tted that the cheque issued by hereafter tendered either in cash e to the defendants. The evidence themselves were in breach o ovided that in case of default, e agreement deemed cancelled. e Court held that the plaintiffs w the defendants had rightfully can ney due to default of plaintiffs

are entitled for recovery as prayed for? (OPP) entitled to the relief of perman has not been affixed on the plai no cause of action to file the pres the pleadings and evidence of ve their readiness and willingnes ed 29.09.2012. It was observed t fs did not make further payments xcept for payments of ₹9 lakhs, ₹ was made after 17.11.2012. T y them was dishonoured and or by draft or cheque, nor did th e of PW1 and PW8 further reflec of the terms, and the agreem , the earnest money would st were not entitled to seek declarat ncelled the agreement and forfei in payment within time and n

-of nent int? sent s to that s as ₹30 hey cted ment ited non-

compliance of t No.4 and 5 wer dismissed on 04 Findings of the

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Fee passed by the T before the Low and terms of the ₹16 lakhs at th payments totalli different dates. H lakhs on 15.11.2 got dishonoured crores due on 1 appellate court h committed breac

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to be forfeited i lakhs, being par be forfeited. Re including Satish Cotton Mills v concluded that p but were entitle terms. Issues No.1 to 3 were de re decided in favour of the pla

4.10.2019 with costs. e lower Appellate Court eling aggrieved by the judgm Trial Court dismissing the suit, er Appellate Court. The appella e agreement to sell dated 29.09.2 he time of execution was admit ing ₹74 lakhs were proved to ha However, as per the agreement, 2012, but they paid ₹65 lakhs on d. Further installments of ₹1.50

6.08.2013, and ₹50 lakhs due on held that plaintiffs were defaulte ch of terms of agreement. e court further held that the earn in view of default clause in Ex. rt payment of sale consideration elying on Section 74 of the In h Batra vs Sudhir Rawal 2012 A vs Tata Air Craft MANU/SC plaintiffs were not entitled to d ed to recovery of ₹74 lakhs alo

ecided against the plaintiffs. Iss aintiffs. Consequently, the suit w ment and decree dated 04.10.20 , the plaintiffs preferred an app ate court re-appraised the evide 2012, and observed that paymen tted as earnest money, and furt ave been made by the plaintiffs plaintiffs were required to pay ₹ nly in cash and cheque of ₹10 la 0 crores due on 31.03.2013, ₹1 n 31.12.2013 were never paid. T ers in payment schedule and ther nest money of ₹16 lakhs was lia P1, but the balance amount of ₹ n and not earnest money, could ndian Contract Act and precede AIR SCW 5869 and Shri Hanum C/0086/1969, the appellate co declaration or specific performan ong with interest @6% per annu

- sues was peal nce nt of ther s on ₹75 akhs

1.50 eby able ₹74 not ents man ourt nce, um,

from date of no was declined.

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Acc Court was modi with 6% interes upheld.

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Ag appellants-defen respondents hav Submissions of

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decree dated 3 allowed the suit was argued that that the plaintiff dated 29.09.201 perform their pa

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It w complete the pa deed executed plaintiffs were p consideration on direction for ref as the plaintiffs otice 04.08.2014 till realization. cordingly, the appeal was partly ified to the extent that defendant st, while the dismissal of suit f grieved by the findings of ndants have preferred the pre ve filed the cross-objections. f learned counsel for the appell e appellants contended that they

30.04.2025 whereby the learne t and directed the appellants to r t the appellate court erred in or ffs themselves were in breach of 12 and had failed to prove th art of the contract. was submitted that the plaintiffs ayment schedule, nor did they e by the target date. There was present or willing to complete n the stipulated date. Therefor fund of any amount except earne had committed breach.

Consequently, relief of injunct y allowed, the judgment of the T ts were directed to refund ₹74 la for declaration and injunction w the lower Appellate Court, esent regular second appeal a lants y are aggrieved by the judgment ed Lower Appellate Court pa refund ₹74 lakhs to the plaintiffs rdering refund without appreciat f the terms of the agreement to heir readiness and willingness s were never financially capable ever show readiness to get the s s no material to suggest that the transaction with complete s re, according to the appellants, est money could have been pass

- Trial akhs was artly s. It ting sell s to e to sale sale sed,

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contractual obli amount receive according to th themselves faile the agreement. I their part were d sought.

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It w any equitable re at the fag end o further submitte governing discr only to a party failed in this reg

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It w termination of t absence of such the cheque issu was made was s

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limiting the def ignoring the inte that only the fir as subsequent p e appellants further argued tha igations and therefore the earn d was liable to be forfeited. T he appellants, was wrongly app ed to prove readiness and willin It was urged that legal notices ca duly served, but no response wa was also argued that the conduct elief, particularly when they def of limitation, which itself reflec ed that the impugned judgmen retionary relief in specific perfor who is ready and willing to pe gard, no relief should have been g was further submitted that the the agreement nor seek declarato h relief, the suit itself was not ma ued by the plaintiffs was dishon sufficient to treat the agreement a e appellants also argued that t finition of earnest money only t ent of parties reflected in the pa rst instalment constituted earnest ayments were also part of the se

at the plaintiffs had failed to fu nest money as well as additio The doctrine of undue enrichme plied against them when plaint ngness except proving execution alling upon the plaintiffs to perfo as given nor extension of time w t of the plaintiffs disentitled them faulted repeatedly and filed the cted absence of bona fides. It w nt is contrary to settled princip rmance, for such relief is availa erform his part. Once the plaint granted to them. e plaintiffs did not challenge ory relief to nullify cancellation aintainable. The undisputed fact t noured and no subsequent paym as validly cancelled. the lower appellate court erred to the initial amount of ₹16 lak ayment structure. The interpretat t money was termed unsustainab ecurity towards performance. It w

- ulfil onal ent, tiffs n of orm was m to suit was ples able tiffs . In that ment d in khs, ble,

contended that segregating paym

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lakhs + ₹74 la plaintiffs' breac The cancellation Submissions of

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In r present cross-ob modifying the ju suit in entirety refund of ₹74,0 that the agreem Marlas clearly r amounts exceed development ac colony. The pla gates and office the contract, but

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It w the defendants a the necessary " plaintiffs conten and 51 of the I frustrated its ex the appellate court failed to ments and restricting forfeiture o e appellants maintained that the akhs, stood forfeited as per te ch, and therefore no direction f n was valid and plaintiffs had no f learned counsel for the respon reply, learned counsel for the re bjections have been preferred a udgment of the trial court dated as prayed for by the plaintiffs 00,000/-, thereby causing miscar ment to sell dated 29.09.2012 records the payment of earnest m ding ₹1,11,00,000/-, after which ctivities on the land with the aintiffs emphasised that they ap e rooms, and spent huge sums w t the defendants did not cooperat was further argued that there wa as they failed to clear the encum "no-encumbrance certificate" re nded that such failure constitute Indian Contract Act, which we xecution. It was argued that des

consider parties' intention wh only to earnest amount. e entire amount paid, including ₹ erms of the agreement owing for refund could have been issu right to seek recovery. ndents espondents/plaintiffs argued that as the lower appellate court, wh

30.04.2025, has failed to decree and only granted partial relief rriage of justice. It was conten for land measuring 165 Kanal money along with further substan the plaintiffs also undertook ma intention of forming a residen pplied for CLU, constructed roa with bonafide intention to compl te. as a fundamental breach on part mbrances on the property and obt equired for PUDA approval. T ed a prior breach under Sections ent to the root of the contract spite receiving and acknowledg

- hile ₹16 g to ued. hile f of ded ls 3 ntial ajor ntial ads, lete t of tain s 39

payments, the d and even resort police record an

23.

appreciate the d a shortfall of ₹ payments, signe waiving objecti also asserted tha payments and d fides, whereas technical objecti

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It w above the earne forfeiture of ear Act and cited Su SCC 136 and F penalty or forfe that the lower a earnest money b

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It w due to develop infrastructure in for expectation commercial rate defendants deliberately created h ted to destruction of structures nd witness statements. e respondents further submitted octrine of waiver and acceptance ₹10 lakh in one instalment, th ed the consent letter and allowe on and being estopped from al at they were always ready and w development activities clearly re defendants failed to meet recip ions only to escape their respons was also argued that forfeiture o est money could not be justified rnest money requires proof of lo upreme Court authorities Kailash Fateh Chand v. Balkishan Das eiture can only be enforced whe appellate court rightly held that but erred in not granting full refu was urged that the plaintiffs had pment work, preparation for c nvestment, and thus were entitle loss and damages. It was fur e of interest, not less than 12%

hurdles, acted with mala fide inte raised by plaintiffs, supported d that the appellate court failed e of performance. Even if there w he defendants continued to acc ed performance to proceed, ther lleging breach later. The plaint willing to perform their part, and flect investment of funds and b procal obligations and later rai sibility. of the entire amount paid over a d in law. They submitted that ev ss under Section 74 of the Contr h Nath Associates v. DDA (2015 ss (1964) 1 SCR 515 to state t en loss is proved. They maintain only ₹16 lakh could be treated und or further relief. d suffered substantial financial l colony approval, construction ed to restitution and compensat rther submitted that they deserv per annum, for the deprivation

- ent, d by d to was cept eby tiffs ona ised ven ract 5) 4 that ned d as loss ved

money from the costs on the gro of contract and i

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To Brahm Dutt v. S that unilateral ca of termination c plaintiff prove performance wi judgment square grant of full reli Findings of this

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Fro dispute that th regarding agric ₹58,80,000/- pe The execution instalments. Th emerges for a consequences fl contract, forfeitu

28.

in payment sche and ₹23 lakh, a payment was te e dates of payment till realization ound that defendants had acted u indulged in vexatious conduct. support their stand, learned coun Sarabjit Singh, 2017 SCC Onli ancellation of agreement by the cannot be accepted unless estab es readiness and willingness ithout valid justification. It was ely applies to the present matter ef by the lower appellate court is s Court om the pleadings, evidence and he parties entered into an agr cultural land measuring 165 K r acre and that plaintiffs made s of agreement Ex.P1 is admit e core factual matrix thus stan adjudication is who committe low from such breach, particula ure of earnest money and refund e defendants' case rests on the a edule. Plaintiffs admit that after a further cheque of ₹10 lakh w endered. On the other hand, th

n. They also pleaded for exempl unfairly, obstructed the performa nsel for the respondents relied up ine P&H 5489, wherein it was h seller is impermissible and the p blished by evidence, and that o , the defendant cannot esc submitted that the ratio of the s in favour of the plaintiffs and n s unsustainable. d admitted documents, it is not reement to sell dated 29.09.20 Kanals 3 Marlas at the rate everal payments from time to tim tted, as is the receipt of vari nds largely undisputed. What tr ed the breach, and what le arly with respect to cancellation d of subsequent deposits. assertion that the plaintiffs defaul the payments of ₹9 lakh, ₹30 l was dishonoured and no subsequ he plaintiffs allege that failure

- lary ance pon held plea once ape said non-t in of me. ious ruly egal n of lted akh uent

defendants to cl their ability to p on 28.10.2013,

31.07.2014. The there is no m performance du mortgage clear beginning Nove

29.

On arises whether th plaintiffs retain clause stipulates per schedule, t defaults, double expressly autho consideration. T examined under

30.

Sec contract contain in case of breac exceeding the a judicial interpre payment of cons

31.

earnest money c lear mortgage and provide 'No-E proceed. The record reveals that prior to the stipulated date o e obligation to clear encumbran material to suggest that plainti ue to defect in title. The paymen rance schedule. Therefore, de ember 2012, is attributable to the nce it is held that plaintiffs com he defendants could unilaterally right to restitution of amount s that in case the purchaser fail the earnest money would stan e earnest money would be re orise forfeiture of further in Therefore, the treatment of payme r Section 74 of the Contract Act. ction 74 of the Indian Contract ns a stipulation for payment of a ch, the Court is empowered to a amount so named, even if actua etation has consistently disting sideration. e Hon'ble Supreme Court in Fa can be forfeited only if breach i

Encumbrance Certificate' frustra defendants redeemed the mortg of execution of the sale deed nce was performed within time iffs were prevented from furt nts stopped at a stage much prior efault in successive instalme e plaintiffs. mmitted breach, the next quest rescind the agreement and whet paid. In the agreement Ex.P1, s to get the sale deed registered nd forfeited, whereas if the se efunded. The agreement does nstalments constituting part s ents beyond earnest money must t Act, 1872 provides that whe sum by way of penalty or forfeit award reasonable compensation al damage is not proved. Howev guished earnest money from p ateh Chand's case (supra) held t is proved, but further amounts p

- ated gage i.e. ther r to nts, ther d as eller not sale t be n a ture not ver, art-that

towards the con forfeiture prove

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Sim reiterated that f breached by th amounts beyond

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Ap execution clearl thereafter forms for performance purchaser, and payment towar corresponding l property and ha default. Therefo without legal ba

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Un itself authorise f agreement, but lower appellate permitting forfe dismissing the s

74.

35.

Brahm Dutt's c ntract cannot automatically be f s loss or damage suffered. milarly, in Kailash Nath Assoc forfeiture of earnest money is e buyer, however, unless loss d earnest money would be contra plying the above principles to ly answers the description of e s part-payment of sale considerat e, can lawfully be forfeited w breach stands established here. rd price of property, cannot loss. The defendants continued ave not shown quantifiable loss ore, retention of the whole amo asis, contrary to Section 73 & 74 nilateral cancellation, even when forfeiture of entire consideration rescission does not convert pa e court, therefore, rightly direc feiture of earnest money. The suit without addressing the statu e reliance of learned counsel fo case (supra) also supports the p

forfeited unless the party claim ciates (supra), the Supreme Co permissible when the contract is shown, forfeiture of additio ary to Section 74. present case, ₹16,00,000/- paid earnest money, while ₹74,00,00 tion. Earnest money, being secu where breach is proved on part But the remaining amount, be t be forfeited without proof to have possession and title of s caused to them due to plainti ount would amount to enrichm . breach is by purchaser, does not n. The defendants could rescind art-consideration into penalty. T ted refund of ₹74,00,000/-, wh e trial court erred in complet utory limitation imposed by Sect or respondents on the judgment principle that unilateral cancellat

- ming ourt t is onal d at 00/- urity t of eing of ffs' ment t by hile tely

cannot result in the breach stan remains relevan Conclusion

In hereinbefore, th decree passed b defendants are e the plaintiffs ar with interest, Consequently, t Court is hereby same terms.

37.

Pen

January 08, 202 tripti

Wh

Wh forfeiture beyond what the law ds against plaintiffs, the legal nt. view of the above discussio his Court finds no infirmity in by the learned First Appellate Co entitled to forfeit only the earne re entitled to refund of the bala does not warrant interferen the RSA is hereby dismissed. T affirmed in toto. The cross-obj nding application(s), if any, also

hether speaking/non-speaking : Speaki hether reportable : Yes/No

allows, though on facts of this c ratio regarding limits of forfeit n, and for the reasons record n the well-reasoned judgment ourt. The finding returning that est money of ₹16,00,000/- and t ance amount of ₹74,00,000/- alo nce in Regular Second App The decree of the Lower Appell ections also stand dismissed in stands disposed of. (MANDEEP PANNU)

JUDGE ing o.

- case ture ded that ong eal.