Readiness and Willingness Must Be Proven—Mere Pleading Is Not Enough For Specific Performance: Supreme Court

“Equity Demands Restoration, Not Windfall”, In a measured yet firm application of equitable principles under the Specific Relief Act, 1963, the Supreme Court of India on January 5, 2026, declined to enforce a decree of specific performance in a 17-year-old property agreement, instead directing the defendants to pay ₹3 crores to the plaintiff in full and final settlement. The Court held that although specific performance may be a legal remedy, it is not an equitable one in every case, especially when both parties have defaulted in their respective obligations and an extraordinary lapse of time has occurred.

The judgment came in the case of Subhash Aggarwal v. Mahender Pal Chhabra & Another, where the Court exercised its power under Article 142 of the Constitution to do complete justice between the parties and bring a final quietus to the long-pending contractual dispute.

“We are of the considered view that appropriate course is to direct the respondents to pay a lump sum amount of ₹3,00,00,000/- to the appellant... This would fully restitute the appellant while avoiding further complications relating to the contract,” held the bench comprising Justice Vikram Nath and Justice Sandeep Mehta.

“Readiness and Willingness Must Be Proven—Mere Pleading Is Not Enough”

At the heart of the dispute was an Agreement to Sell dated 22.01.2008 for a residential property in Ashok Vihar, Delhi, measuring 300 square yards, at a total sale consideration of ₹6.11 crores. The plaintiff paid ₹60 lakhs as earnest money and ₹30 lakhs as further advance within two months of the agreement.

However, when the case reached the Delhi High Court in appeal against a Trial Court decree of specific performance, the Division Bench reversed the decree, holding that the plaintiff had not established financial capacity or readiness to pay the remaining ₹5.21 crores on the due date, i.e., 10.05.2008, and had not even appeared before the Sub-Registrar for execution of the sale deed.

The Supreme Court upheld this key finding:

“The appellant failed to prove his readiness and willingness. He had not been able to demonstrate that he had the necessary financial wherewithal... In addition to that, he did not even visit the office of the Sub-Registrar on the above date.”

However, the Court was equally critical of the defendants, noting that they too had not fulfilled their obligations under the contract, such as securing mutation and conversion of the leasehold property to freehold.

“Specific Performance Is a Discretionary and Equitable Remedy—Not a Matter of Right”

The Court stressed that Section 20 of the Specific Relief Act, 1963 does not grant a party an automatic right to specific performance, particularly when equitable considerations override the mechanical enforcement of contracts.

“It is a settled principle that equity must operate in a manner that prevents unjust enrichment and restores the parties to their original position, as far as possible, particularly where both parties are at fault,” observed the Court.

The judgment noted that over seventeen years had passed since the agreement, and enforcing the contract now would lead to undue hardship and complications, especially given the escalation in property values and changed circumstances.

Thus, the Court declined to enforce specific performance and instead crafted an alternative equitable remedy, under the inherent jurisdiction of Article 142.

“Forfeiture of ₹60 Lakhs Was Unjust and Unequitable”: Supreme Court Overrules High Court on Refund

The Delhi High Court, while dismissing the suit, had permitted the defendants to forfeit the ₹60 lakhs paid as earnest money, though it directed refund of the ₹30 lakhs paid later with 9% interest.

The Supreme Court categorically rejected this approach:

“Directing forfeiture of the earnest money would result in an equitable windfall to the respondents.”

The Court held that such forfeiture, especially when both parties are at fault, could not be justified under equitable doctrines. Instead, the bench directed that a composite amount of ₹3 crores be paid by the defendants to the appellant within four weeks, bringing a final resolution to the protracted litigation.

“Equity Rescues What Law Cannot Repair”: A Judicious Blend of Law and Justice

By awarding lump sum compensation in lieu of specific performance, the Supreme Court ensured that the principles of restitution and fairness prevailed, even when legal remedies were unavailable. In doing so, it also prevented a “legal windfall” to the defendants and denial of restitution to the plaintiff.

The judgment reaffirms the Court’s consistent jurisprudence that specific performance is a discretionary remedy, governed not merely by the letter of the contract but by the balance of equities, conduct of parties, and passage of time.

Ultimately, the Court declared:

“This would fully restitute the appellant while avoiding further complications relating to the contract and also bring quietus to a dispute that has been protracted for over a decade.”

Date of Decision: January 5, 2026