Plaintiff who failed to perform his part of property sale agreement not entitled to full refund or compensation: Patna High Court
The Patna High Court has held that a purchaser who failed to perform his obligations under a property sale agreement cannot seek specific performance of the contract or claim a full refund with additional compensation contrary to the terms agreed between the parties.Justice Jitendra Kumar partly allowed a first appeal filed by the original defendant and modified a trial court decree which had directed refund of Rs.43.30 lakh with 9% interest and payment of an additional compensation of Rs.5 lakh to the purchaser.The High Court held that the purchaser himself had defaulted in performing his obligations under the agreement and was therefore entitled only to the amount payable after deduction of 10% of the advance money, as specifically provided under the contract.BackgroundThe dispute arose out of an agreement for sale executed on 23.08.2010 in respect of a house property standing over land measuring 3 kathas and 10 dhurs. The total sale consideration agreed between the parties was Rs.1.55 crore.The plaintiff, Umesh Kumar Sahu, instituted Title Suit No. 564 of 2011 seeking specific performance of the agreement and execution of the sale deed in his favour. Alternatively, he sought refund of Rs.43.30 lakh, which had already been paid to the defendant towards the sale consideration, along with interest at 18% per annum.According to the plaintiff, he had performed his obligations under the agreement and had always remained ready and willing to complete the transaction, but the defendant had failed to execute the sale deed.The defendant, however, argued that it was the plaintiff who had defaulted in making payments as stipulated under the agreement, resulting in cancellation of the transaction.Trial Court DecreeAfter examining oral and documentary evidence adduced by both parties, the trial court partly decreed the suit.While declining the relief of specific performance, the trial court directed the defendant to refund the entire amount of Rs.43.30 lakh along with interest at 9% per annum from 31 December 2010. The court further awarded compensation of Rs.5 lakh to the plaintiff.Aggrieved by this part of the decree, the defendant preferred the present first appeal.Meanwhile, the plaintiff also filed a cross-appeal seeking specific performance. However, the cross-appeal was not pressed after it was brought to the notice of the Court that the subject property had already been sold to third parties and impleadment of such purchasers would delay the proceedings.Terms Of AgreementThe High Court noted that under the agreement, out of the total sale consideration of Rs.1.55 crore, Rs.35 lakh had already been paid by the plaintiff at the time of execution.The agreement further required the plaintiff to pay another Rs.25 lakh within four months and an additional Rs.25 lakh within eight months. Only after receipt of the next instalment was the defendant required to redeem the property from an existing mortgage with the State Bank of India and clear liabilities relating to holding tax, electricity dues and land revenue.The agreement also contained a clause stipulating that if the purchaser defaulted in making payments, the seller would be entitled to deduct 10% of the advance money and refund the balance amount.Justice Kumar observed that the contractual terms unambiguously required the plaintiff to pay Rs.25 lakh within four months from the date of execution of the agreement. However, apart from subsequent payments of Rs.6 lakh on 06.12.2010 and Rs.2.30 lakh on 31.12.2010, no further payments were made by the plaintiff.The Court found that there was no pleading or evidence showing either payment of the stipulated amount or readiness and willingness on the plaintiff’s part to make such payment.Accordingly, the Court concluded that the plaintiff had failed to perform his part of the contract.The Court observed:“It clearly shows that the Plaintiff/Respondent did not perform his part of the contract as required, rendering him disentitled to get equitable relief of specific performance.”The High Court referred to Section 16(c) of the Specific Relief Act, 1963, which bars enforcement of specific performance in favour of a person who fails to prove readiness and willingness to perform the essential terms of the contract.Justice Kumar observed that where a plaintiff fails to perform essential obligations under the agreement, specific performance cannot be granted in his favour. Since the plaintiff had failed to establish continuous readiness and willingness, the denial of specific performance by the trial court was held to be justified.The Court also noted that the trial court itself had found that the plaintiff had failed to perform his obligations and lacked readiness and willingness. Despite such findings, the trial court had directed refund of the entire amount with interest and further awarded compensation of Rs.5 lakh.According to the High Court, these findings were contradictory.Justice Kumar held that when the agreement itself provided for deduction of 10% of the advance amount in the event of default by the purchaser, the trial court could not have ignored that stipulation and directed refund of the entire amount.The Court found that 10% of Rs.43.30 lakh amounted to Rs.4.33 lakh.The Court further observed that although the defendant was entitled to deduct 10% under the agreement, he had never refunded the balance amount to the plaintiff. To avoid unjust enrichment, the defendant was directed to pay reasonable interest on the amount due.The High Court held that the defendant could not be penalised by directing payment of compensation when it was the plaintiff who had committed default under the agreement.Justice Kumar observed that in view of the plaintiff’s failure to perform his obligations, there was no justification for awarding additional compensation of Rs.5 lakh.Accordingly, the compensation awarded by the trial court was set aside.Allowing the appeal in part, the High Court directed the defendant to pay Rs.38.97 lakh to the plaintiff together with interest at 6% per annum from 23.12.2010. The Court directed that the amount be paid within two months.It further ordered that in case of failure to make payment within the stipulated period, the defendant would be liable to pay penal interest at the rate of 12% per annum thereafter.Accordingly, the appeal was partly allowed and the impugned judgment and decree passed by the trial court were modified.Case Title: First Appeal No. 67 of 2017 Prusottam Swaroop v. Umesh Kumar SahuCourt: Patna High CourtJudge: Justice Jitendra KumarDecision Date: 15.06.2026Appearance:For the Appellant: Mr. Dhiraj Sagar, Advocate Mr. Santosh Kumar Singh, Advocate For the Respondent: Mr. P.N. Shahi, Sr. Advocate Mr. Bipin Bihari, Advocate(The author of this article, Vatsal Chandra is a Delhi-based Advocate practicing before the courts of Delhi NCR.)
