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M/s. Tomorrowland Limited v. Housing and Urban Development Corporation Limited

Civil Appeal · 2025 INSC 207Decided 13 Feb 2025
Civil Appeal (arising out of SLP(C) No. 34338 of 2016)
Justice Surya Kant · Justice Ujjal Bhuyan

Background

In 1994, the Housing and Urban Development Corporation (HUDCO) allotted land at Andrew's Ganj, Delhi, to the appellant to build a 5-star hotel and car park, for a total premium of about Rs. 78 crores payable in instalments. The appellant paid the first instalment (about Rs. 28 crores) but then refused to pay the next instalments, arguing that HUDCO itself had failed to get the required statutory approvals and had not executed a formal sub-lease as promised. When the appellant also failed to comply with a court-ordered deposit, HUDCO cancelled the allotment and forfeited the entire amount already paid, triggering over two decades of litigation across multiple courts.

Decision Breakdown

The Supreme Court found that HUDCO itself was in breach of the allotment terms. It never obtained the necessary approvals under the Urban Land (Ceiling and Regulation) Act and the Income Tax Act, never executed the promised sub-lease, and did not even hold a valid lease over the land from the government until years later. Under the allotment letter's own terms, this obligated HUDCO to refund the money without interest, not forfeit it. However, the Court also found that the appellant had engaged in "brazen" forum shopping and deceptive litigation conduct, including failing to comply with a court's deposit order and dropping a claim for possession simply to avoid paying court fees, so, invoking the "clean hands" doctrine, it denied the appellant any interest on the refunded amount, unlike the interest normally awarded in commercial disputes.

Lesson Learnt

A party can still win the core legal point (getting its forfeited money back because the other side breached the contract first) while being denied the extra relief of interest, if the court finds that party's own conduct in the litigation (evasive tactics, forum shopping, non-compliance with court orders) was not in good faith; courts of equity expect "clean hands" from anyone claiming discretionary relief.

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

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