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Canara Bank vs. K.L. Rajgarhia (D) Thru LRs.

Not available · 2025 INSC 1278Decided 9 Oct 2025
Not available
Justice Aravind Kumar · Justice Vipul M. Pancholi

Background

Canara Bank (as plaintiff) had entered into an agreement to sell dated 27.12.1984 with the defendant for a property in East of Kailash, Delhi, worth Rs. 32,07,500, under which the defendant was to construct eight flats on the property and hand some over to the Bank. Disputes arose over registration and performance of the agreement, and the Bank sued for specific performance. The Trial Court (Single Judge) decreed the suit in the Bank's favour, directing execution of a registered sale deed, but the Division Bench of the Delhi High Court reversed this on appeal, dismissing the suit for specific performance while ordering a refund of consideration already paid.

Decision Breakdown

The Supreme Court upheld the Division Bench's reversal, agreeing that the Trial Court had erred by effectively rewriting or modifying the agreement to make it "workable" in a form different from what was actually agreed, which was not legally justified. The Court held that specific performance could not be granted on the modified/reinterpreted terms and endorsed the High Court's observation that a public sector bank, as a State instrumentality, should not enter into "camouflage agreements," particularly where the object of the agreement could result in a violation of law. The appeal was dismissed and the High Court's judgment affirmed, with parties bearing their own costs.

Lesson Learnt

Courts will not grant specific performance of a contract by rewriting or reinterpreting its terms to make an unworkable agreement workable: an agreement must be enforced as actually made, not as a court thinks it should have been made; and public financial institutions are held to a stricter standard against entering agreements that could disguise or violate legal requirements.

Official source (sci.gov.in)View Judgment (PDF)

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