December 16, 2022 In Uncategorized


Recently, a two Judge Bench of the Supreme Court comprising of Justice Surya Kant and Justice Bela M. Trivedi passed a Judgment dated 14.11.2022 in DESH RAJ AND ORS. VS. ROHTASH SINGH. in CIVIL APPEAL NO. 921 of 2022, and observed that unless a Plaintiff specifically seeks the refund of the earnest money at the time of filing of the Suit or by way of amendment, no such relief can be granted to the Plaintiff.


The subject matter of the original Suit was a property situated in District Gurgaon (hereinafter, ‘Property’) which the Appellants jointly owned to the extent of their respective shares. Two separate agreements (Agreement(s)) to sell were entered into between the Parties for the Property on 17.02.2004. In the first Agreement, Appellant Nos. 1 to 4 agreed to sell their share to the extent of 4/5th of the Property while in the second Agreement, Appellant No. 5 agreed to sell the remaining 1/5th share to the Respondent which accrued to her and her minor son. Under the aforesaid Agreements, the sale consideration was set at the rate of Rs 79,00,000/­ per acre. Accordingly, the Respondent is stated to have paid Rs.22,90,000/­ in total as part payment of the sale consideration which was in the nature of earnest money. As per Clause 4 of Sale Agreements, the earnest money could be forfeited by the Appellants if the sale deed was not executed on the prescribed date, i.e. 16.08.2004 (hereinafter, ‘Date of Execution’). The Appellants state that as per the Sale Agreements, requisite permission under The Hindu Minority and Guardianship Act, 1956 was obtained by them before the Date of Execution. The same was communicated to the Respondent via notice dated 10.07.2004. Their case is that in furtherance of the Agreements, Appellants appeared before the Sub­Registrar, Gurgaon on the Date of Execution but the Respondent failed to appear before the Sub­Registrar for the purpose of executing the Sale Deed and payment of balance sale consideration.

The Appellants served legal notices dated 18.08.2004 on the Respondent giving an additional opportunity to him to appear before the Sub­Registrar. It was also clearly stated that as per the Agreements, the Appellants were entitled to forfeit the earnest money and treat the Agreements as cancelled. The Respondent, however, failed to appear for execution and registration of the sale deed, because of which the Appellants forfeited   the   earnest   money   and   treated   the   Sale Agreements as cancelled. The situation remained dormant until January 2006 when the Respondent, the original plaintiff, initiated a suit seeking relief of specific performance of Sale Agreements and other consequential reliefs. However, during the pendency of the suit before the Trial Court, State of Haryana initiated acquisition proceedings vide Notification dated December 12, 2008 issued under Section 4 of Land Acquisition Act, 1894. Consequently, the subject land was acquired by the State. Due to this subsequent event, the Respondent sought and was permitted by the trial court to amend the plaint. In the amended plaint, the Respondent took the stand that he was always ready and willing to execute the Sale Agreements and that the Appellants were the ones who did not   furnish the required documents for the necessary sanction and grant of NOCs. After perusal of both the documentary as well as oral evidence, the Trial Court concluded that   both the Parties were equally responsible for rendering the Sale Agreements as unenforceable.

However, the Trial Court then went on to hold that the Sale Agreements were either way rendered impossible to perform in view of the land acquisition proceedings and   proceeded to grant decree of recovery of earnest money on the principle of unjust enrichment. The First Appellate Court upheld the decree granted by Trial Court on entirely identical reasons.

The High Court went on to uphold the decree passed by the courts below, noting that in view of the acquisition proceedings, the alternate relief of recovery of earnest money was legally correct.


Whether the Respondent was entitled to recovery of earnest money?


Aggrieved by the aforementioned Judgement of the High Court of Punjab and Haryana, the Appellant moved the Supreme Court under Article 133 of the Constitution of India (Appeals to the Supreme Court in Civil Matters).

The Apex Court noted that the Plaintiff had neither prayed for the relief of refund of earnest money in the original plaint nor had he sought any amendment at a subsequent stage. Referring to Section 22[1] of the Specific Relief Act, the Court observed:

“The plaintiff in his Suit for specific performance of a contact is not only entitled to seek specific performance of the contract for the transfer of immovable property but he can also seek alternative relief(s) including the refund of any earnest money, provided that such a relief has been specifically incorporated in the plaint. The court, however, has been vested with wide judicial discretion to permit the plaintiff to amend the plaint even at a later stage of the proceedings and seek the alternative relief of refund of the earnest money. The litmus test appears to be that unless a plaintiff specifically seeks the refund of the earnest money at the time of filing of the Suit or by way of amendment, no such relief can be granted to him. The prayer clause is a sine qua non for grant of decree of refund of earnest money. In the absence of such a prayer, it is difficult to accept that the courts would suo­-moto grant the refund of earnest money irrespective of the fact as to whether Section 22(2) of SRA Act is to be construed directory or mandatory in nature.”


Thus, based on the aforesaid observations, the Apex Court observed that the Respondent had neither prayed for the relief of refund of earnest money in the original plaint nor he sought any amendment at a subsequent stage. The Court concluded that the decree granted by the courts below was hinged on a logical fallacy wherein the Appellants were   held to be unjustly enriched on the premise that the contract was rendered impossible to perform due to acquisition proceeding. Hence, the appeal was allowed and the impugned judgments were set aside.


In all litigations, the prayer clause is the most clause that many a times is not treated with importance and seriousness and this can then result in a situation similar to the Respondent’s position where he failed to seek relief of refund of earnest money. It is therefore extremely important that the lawyer as well as the client is clear on the reliefs that are to be sought in the litigation failing which they may lose the case.


Devashish Kakkar

Legal Associate

The Indian Lawyer


[1] Power to grant relief for possession, partition, refund of earnest money, etc.

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