2026 INSC 700
Jaspal Singh v. Ashwani Kumar
HEAD NOTES
A. Specific Relief Act, 1963 — Section 23 — Agreement to Sell — Earnest money clause — Specific performance.
Held, a clause providing that the vendor shall refund the earnest money if the sale deed could not be executed does not by itself confer upon the vendor an option to avoid the contract. Unless the agreement clearly provides that payment of money is intended to be a substitute for performance, the purchaser remains entitled to seek specific performance.
B. Contract — Construction of agreement — Refund clause.
Held, the true test is whether the contract gives the defaulting party an election either to perform the contract or merely to pay money in lieu of performance. A clause requiring refund of earnest money merely secures performance and does not extinguish the remedy of specific performance.
C. Code of Civil Procedure, 1908 — Section 100 — Scope of Second Appeal.
Held, the High Court cannot reappreciate evidence or interfere with concurrent findings of fact unless such findings are shown to be perverse, based on no evidence, or arrived at by ignoring material evidence. The First Appellate Court remains the final court on facts.
D. Specific Performance — Readiness and willingness — Concurrent findings.
Held, where the Trial Court and the First Appellate Court concurrently hold that execution of the agreement and the purchaser's readiness and willingness stand proved, the High Court cannot reopen such findings in second appeal without recording perversity.
E. Fraud — Burden of proof.
Held, a plea that signatures were obtained on blank papers and subsequently converted into an agreement to sell must be strictly proved. Mere allegations or suspicion, unsupported by handwriting evidence or other convincing material, cannot displace a duly proved written agreement.
F. Agreement to Sell — Undivided share of co-owner.
Held, an undivided share of a co-owner in immovable property is a valid subject matter of transfer. Joint ownership of the property or non-joinder of the co-owner in the agreement does not render the transaction suspicious or unenforceable.
G. Extension of time — Effect.
Held, consensual extension of time for execution of the sale deed is consistent with the parties' continuing intention to complete the transaction and cannot, by itself, be treated as evidence that the agreement is sham or fictitious.
H. Specific Relief — Equitable relief.
Held, once a valid agreement, readiness and willingness of the purchaser, and absence of any legal bar are established, specific performance ought not to be refused on conjectures or circumstances inconsistent with concurrent findings of fact.
Analysis of Facts
The appellant entered into an Agreement to Sell dated 22 June 2003 with the respondent for purchase of the respondent's half share in immovable property for a consideration of ₹12.50 lakh and paid ₹9 lakh as earnest money.
The parties twice extended the time for execution of the sale deed. The appellant appeared before the Sub-Registrar on the stipulated dates, but the respondent failed to execute the sale deed.
The appellant instituted a suit for specific performance.
The respondent denied execution of the agreement and alleged that his signatures had been obtained on blank papers as security for a proposed travel arrangement and were subsequently converted into an Agreement to Sell.
The Trial Court accepted execution of the agreement but declined specific performance, holding that the agreement merely entitled the purchaser to refund of earnest money.
The First Appellate Court reversed the decree and granted specific performance.
The High Court, in second appeal, restored the Trial Court's decree by holding that the agreement did not contemplate specific performance and by drawing adverse inferences from surrounding circumstances.
The Supreme Court allowed the appeal, restored the decree for specific performance and held that the High Court had exceeded its jurisdiction under Section 100 CPC by reappreciating concurrent findings of fact without recording perversity.
Analysis of Law
The Supreme Court laid down the following principles:
Section 23 of the Specific Relief Act permits specific performance notwithstanding a clause providing for payment or refund of money upon breach.
The decisive test is whether the contract confers an option to substitute payment for performance.
A clause providing refund of earnest money ordinarily secures performance and does not create an option to rescind the contract.
The First Appellate Court is the final court on facts.
In a second appeal under Section 100 CPC, the High Court may interfere with concurrent findings only upon demonstrating perversity or substantial legal error.
Allegations of fraud must be proved by cogent evidence and cannot rest upon suspicion or conjecture.
Transfer of an undivided share by a co-owner is legally recognised and does not affect the validity of an agreement to sell.
Mutually agreed extensions of time ordinarily reinforce the parties' intention to complete the sale rather than undermine the genuineness of the transaction.
Once execution of the agreement, readiness and willingness, and absence of any legal impediment are established, specific performance should ordinarily follow.
Ratio Decidendi
A stipulation in an agreement to sell requiring refund of earnest money if the sale deed is not executed does not, by itself, confer upon the defaulting vendor an option to avoid performance or bar the remedy of specific performance. Under Section 23 of the Specific Relief Act, the Court must ascertain whether payment of money was intended as a substitute for contractual performance; absent such intention, the purchaser remains entitled to specific performance. Further, the High Court, while exercising jurisdiction under Section 100 CPC, cannot reappreciate evidence or disturb concurrent findings of fact regarding execution of the agreement, readiness and willingness, and rejection of the defence of fraud, unless such findings are shown to be perverse or unsupported by evidence.
