2025 Supreme(SC) 332

SUPREME COURT OF INDIA
SURYA KANT, UJJAL BHUYAN, JJ.
M/s. Tomorrowland Limited – Appellant
versus
Housing and Urban Development Corporation Limited and Another – Respondents
Civil Appeal No. of 2025 (Arising out of SLP (C) No. 34338 of 2016)
Decided On : 13-02-2025

IMPORTANT POINTS
(1) Breach of reciprocal contractual obligations – A commercial document ought not to be interpreted in a manner that arrives at a complete variance with what may originally have been intention of parties.
(2) Interest – As a general principle, in commercial disputes, award of interest pendente lite or post- decree is typically granted as a matter of course – Under Section 34 of CPC, award of interest is a discretionary exercise steeped in equitable considerations.
(3) Equity – Whosoever comes to court claiming equity, must come with clean hands – He who seeks equity must do equity.

Headnote:

(A) Contract Act, 1872 – Section 74 – Breach of reciprocal contractual obligations by respondent-HUDCO – Refund of forfeited amount – Parties had ample knowledge of obligation cast upon Respondent No. 1 to refund amounts paid by Appellant in case statutory approvals were not accorded – It is imperative to maintain sanctity of terms of agreement between parties – A commercial document ought not to be interpreted in a manner that arrives at a complete variance with what may originally have been intention of parties – Respondent No. 1 is liable to refund amount along with interest. (Paras 45 and 47)

(B) Civil Procedure Code – Section 34 – Interest – Award of interest on refund of forfeited amount – As a general principle, in commercial disputes, award of interest pendente lite or post- decree is typically granted as a matter of course – Under Section 34 of CPC, award of interest is a discretionary exercise steeped in equitable considerations – Power to award interest ought to be exercised judiciously, aligning with equitable considerations and also ensuring neither undue enrichment nor unfair deprivation – Courts are duty-bound to assess facts and circumstances of each case, applying principles of fairness and justice – This discretion must reflect a balanced approach, grounded in reason, and guided by overarching objective of equity – Material on record sufficiently indicates that Appellant did not approach Court with clean hands and instead attempted to hoodwink judicial process by creating a facade to subterfuge their inability to meet their contractual obligations – Intent of Appellant throughout appears to be that of prolonging litigation to cloak its impecuniousness – Appellant is not entitled to any discretionary relief of interest under Section 34 of CPC. (Paras 49, 50, 56, 58, 59 and 60)

(C) Equity – Whosoever comes to court claiming equity, must come with clean hands – Expression ‘clean hands’ connotes that suitor or defendant have not concealed material facts from court and there is no attempt by them to secure illegitimate gains – Any contrary conduct must warrant turning down relief to such a party, owing to it not acting in good faith and beguiling court with a view to secure undue gain – A court of law cannot be abettor of inequity by siding with party approaching it with unclean hands – He who seeks equity must do equity. (Para 57)

Facts of the case:

Instant appeal preferred by M/s Tomorrowland Technologies Exports Limited (formerly M S Shoes East Ltd.) is directed against judgment dated 03.06.2016 passed by High Court of Delhi (High Court) in RSA whereby concurrent findings returned by courts below have been set aside and Appellant’s suit seeking declaratory relief has been dismissed for being not maintainable.

Salient issues that arise for consideration are: –

(a) Whether Respondent No. 1/HUDCO was in breach of its reciprocal contractual obligations qua the Appellant?

(b) If so, whether the Appellant is entitled to a refund of the forfeited amount under Clause 5(vi) of the Allotment Letter?

(c) If Issue (b) above is answered in the affirmative, whether the Appellant is entitled to interest on refund of the forfeited amount?

Findings of Court:

Shortly after vacation of the status quo order and cancellation of allotment, Appellant sought to withdraw First Suit which was pending before High Court under its original jurisdiction, instead of seeking amendment of plaint and the consequential relief(s) on the basis of subsequent events. This was done with an oblique motive, as Appellant did not want to take a chance before High Court whose order they had failed to comply with. Appellant thus withdrew First Suit unconditionally even without the liberty to file a fresh one, ostensibly with a calculated mindset.

Result : Appeal disposed of.