A suit for specific performance is not maintainable if the buyer accepted the refund of earnest money and failed to seek declaratory relief against the cancellation of the agreement.

JUDGMENT :

MANMOHAN, J.

1. Leave granted.

2. The primary issue that arises for consideration in the present civil appeal is whether a suit for specific performance of an Agreement to Sell is liable to be decreed if the buyer had accepted the refund of majority of the earnest money deposit/advance consideration, during the pendency of the civil suit?

3. Brief facts leading to the present appeal are as under:-

3.1. Late Kushum Kumari (“original defendant” / “seller”) was allotted the subject property by the People's Cooperative House Construction Society Limited (“Society”) vide a registered sub-lease Signature Not Verified dated 2^nd April 1968.

3.2. On 25^th January 2008, an unregistered Agreement to Sell with respect to the subject property was executed between the “Respondent No.1-buyer”-plaintiff and the seller for a total sale consideration of Rs. 25,00,000/- (Rupees Twenty Five Lakhs). At the time of the execution of the Agreement to Sell, the Respondent No.1- buyer paid a sum of Rs.2,51,000/- (Rupees Two Lakh Fifty One Thousand) in cash to the seller and issued three post-dated cheques worth Rs.7,50,000/- (Rupees Seven Lakh Fifty Thousand).

3.3. It is the case of Respondent No.1-buyer that when she visited the subject property along with her husband on 11^th February 2008, the tenants of the seller created a scuffle and forced them to return. In the circumstance, the Respondent No.1-buyer issued legal notices dated 23^rd February 2008 and 23^rd April 2008, expressing her intention to pay the balance sale consideration and to get the property registered in her favour.

3.4. Upon the failure of the seller to execute the sale deed, Respondent No.1-buyer filed a suit before the Trial Court, Sub Judge-IV, Patna under the Specific Performance Act, 1963 (“Act, 1963)” seeking specific performance of the Agreement to Sell dated 25^th January 2008 and the same was registered as Title Suit No.TS/176/2008 (“subject suit”).

3.5. The subject suit was contested by the seller by filing a written statement, stating therein that she came to know about the Agreement to Sell dated 25^th January 2008 on 5^th February 2008 and immediately thereafter, made a complaint dated 6^th February 2008 with the Inspector of Police-cum-Station House Officer, Kankarbagh Police Station, Patna stating that her signatures had been fraudulently taken on the Agreement to Sell dated 25^th January 2008. It was further stated that the seller issued a letter dated 7^th January 2008 cancelling the Agreement to Sell dated 25^th January 2008 and refunded Rs.2,11,000/- (Rupees Two Lakh Eleven Thousand) through five demand drafts dated 7^th February 2008 in lieu of the cash and returned two of the three post-dated cheques of Rs.2,50,000/- (Rupees Two Lakh Fifty Thousand) each, which were issued by the seller. Vide Order dated 16^th December 2008, issues were framed by the Trial Court.

3.6. Upon the demise of the seller, the Respondent No.3 herein, who is the step grandson of the seller, was impleaded as substituted defendant no. 1 and the appellant herein was impleaded as defendant no. 3 as the subject property had been bequeathed in her favour by way of a Will dated 23^rd September 2002 executed by the original owner/seller.

3.7. After consideration of the depositions of PW-1 (Respondent No.1 herein) and her husband, PW-2, the Trial Court framed three additional issues vide order dated 21^st January 2013. The issues were framed once again on 27^th April 2018, and a judgment was passed in favour of Respondent No.1-buyer on the same date.

3.8. The judgment dated 27^th April 2018 and the decree dated 10^th May 2018 were challenged by the appellant herein in First Appeal No. 83 of 2018. The said appeal was dismissed by the Patna High Court vide the impugned Judgment dated 9^th May 2024.

3.9. Upon the present Special Leave Petition being filed, this Court, while issuing notice, had directed parties to maintain status quo with respect to the possession on 20^th August 2024.

SUBMISSIONS ON BEHALF OF THE APPELL