T.D. Vivek Kumar & Anr. vs. Ranbir Chaudhary
Background
The appellants (original defendants/sellers) had entered into a sale agreement with the respondent (original plaintiff/buyer) for a plot of land for about Rs. 17.61 lakhs, with the buyer paying Rs. 2 lakh as earnest money. The sale agreement's clause 2 specifically provided that if the sellers failed to execute the sale deed within the stipulated time, the buyer would be entitled to double the advance amount as compensation instead of performance. When the sale deed was not executed, the buyer sued for specific performance. The Trial Court and the First Appellate Court both refused specific performance but decreed recovery of Rs. 4 lakhs (double the earnest money) per the contract's own terms; the Punjab and Haryana High Court, however, reversed this in second appeal and granted specific performance instead, prompting the sellers to appeal to the Supreme Court.
Decision Breakdown
The Supreme Court held that where a contract itself names a specific sum as an alternative to performance (here, double the advance paid if the seller defaults), courts may refuse a decree of specific performance and instead enforce the agreed monetary remedy, relying on its earlier decisions in Sardar Singh v. P. D'Souza and M.L. Devender Singh v. Syed Khaja. It found that the Trial Court and First Appellate Court had correctly interpreted clause 2 of the sale agreement, and that the High Court materially erred in setting aside their concurrent findings and instead granting specific performance without properly considering this contractual stipulation. The Court quashed the High Court's judgment, restored the original decree for recovery of Rs. 4 lakhs, and disposed of the connected cross-objection appeal accordingly.
Lesson Learnt
When drafting or interpreting a sale agreement, a clause that specifically fixes a monetary sum as an alternative remedy for default (rather than leaving open the possibility of forced execution) can itself defeat a later claim for specific performance: parties should read such clauses carefully, since courts will enforce the bargain the parties actually struck.