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2026 Supreme(Gau) 832

THE GAUHATI HIGH COURT (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)
SANJEEV KUMAR SHARMA, J.
Meghmallar Estates And Services And Anr. – Petitioners 
Versus
Dr. Kishore Kumar Das And Anr. – Respondents 
RFA/116 of 2017, CO/15 of 2018
Decided On : 30-04-2026

Advocates Appeared:
For the Petitioner: Mr. J Chopra, Ms. P Dutta, Mr. N Baruah, Mr.O P Bhati,Mr.S K Singh, Mr.V K Chopra, Ms.A Lahkar
For the Respondent: Mr. R Sarma, N Chaudhury,Mr A Deka, Mr. M Das,Mr.B Barman, Mr. D Baruah, Mr. N B P Singha, Mr H Deka, Mr D Hazarika, Mr A Hussain

A contract for an act that is illegal or impossible under prevailing regulations is void. A party cannot claim damages or specific performance for an agreement they knowingly entered into to perform an illegal act, as their own conduct disqualifies them from receiving equitable relief.

Headnote:(A) Specific Performance - Contractual Liability - Refund of Deposit - Interest Rate - Code of Civil Procedure - Order 1 Rule 10 - Parties to a contract - Non-joinder of parties - A lawsuit for specific performance is maintainable without adding additional family members if the agreement for sale was executed solely between the developer and the primary purchaser.

(B) Contract Law - Section 56 of the Contract Act - Impossibility and Illegality - A contract to perform an act that is legally impermissible under municipal building regulations at the time of execution is void from the inception. Parties knowingly participating in an agreement for illegal purposes are barred from claiming damages or compensation for breach of contract.

(C) Interest - Accrual - Equity dictates that interest on a refunded deposit should accrue from the date of payment made by the purchaser to the developer rather than the date of the suit, as the developer has enjoyed the benefit of the consideration received.

Facts of the case:
The purchaser entered into a contract with a developer for a commercial space intending to convert it into a healthcare facility. The developer failed to obtain the required permission for the conversion because it was contrary to municipal usage regulations. The purchaser sued for specific performance and damages, alleging fraud and financial loss. The trial court rejected specific performance but ordered a refund of the deposit with interest. The appeal challenged the quantum of the refund, the start date for interest, and the denial of additional damages.

Findings of Court:
The court determined that the suit was maintainable as the purchaser was a party to the registered agreement. The court affirmed that the developer must refund the principal amount as evidenced by receipts in the purchaser's name. It modified the order to reflect that interest should accrue from the date of the respective payments. The court further ruled that the purchaser was not entitled to damages as they had sought to enforce an agreement they knew or ought to have known was for an impermissible use of the property.

Issues: The main issues were whether the suit was defective due to non-joinder of the purchaser's spouse, the correct principal amount and interest start date for the refund, and whether the purchaser was entitled to damages for breach of contract.

Ratio Decidendi: A party cannot invoke the court's jurisdiction to enforce an act that is inherently illegal under building codes. Consequently, claims for damages arising from the failure to perform such an illegal act must fail, as the claimant’s own conduct in knowingly pursuing an improper transaction precludes an award for compensation.

Result: Appeal partly allowed; cross-objection dismissed.

Table of Content
1. factual background involving breach of contract and property allotment disputes. (Para 1 , 2 , 3 , 4 , 5 , 6)
2. procedural history and consolidation of appeal and cross-objections. (Para 7 , 8 , 9 , 10 , 11)
3. determination of necessary parties under order 1 rule 10 cpc. (Para 12 , 13 , 14 , 15 , 16 , 17)
4. interest calculation on refund of payments based on contractual clauses and section 56 of the indian contract act. (Para 18 , 19 , 20 , 21 , 22 , 23 , 24)
5. evaluation of fraud claims and eligibility for damages in contracts for illegal objects. (Para 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33)
6. final orders modifying the degree concerning interest amounts. (Para 34 , 35 , 36)

JUDGMENT :

Sanjeev Kumar Sharma, J.

Heard Mr. N. Baruah, learned counsel for the appellant in RFA No. 116/2017 and respondent in CO No. 15/2018. Also heard Mr. B.D. Deka, learned counsel appearing for the respondents in RFA No. 116/2017 and objector in CO No. 15/2018.

2. The present respondent, as plaintiff, had instituted a suit for specific performance of contract, permanent injunction, alternatively for recovery of money and compensation, etc.

3. This appeal has been preferred against the judgment and decree dated 17.07.2017 passed by the Civil Judge No. 3, Kamrup (M) Guwahati in Title Suit No. 86/2010 decreeing the suit.

4. The brief facts of the case are that the plaintiff and his wife are doctors by profession. In search of space to open up a doctor's chamber cum clinic they met defendant No.3 who introduced them to defendant No.2, the MD of defendant No.1 Company. A discussion took place amongst them and the defendant No.2 verbally agreed to provide ground floor space measuring 1000 sq. ft plus frontage area of about 400 sq. ft as well as first floor area of 1375 sq. ft. in the under construction Meghmallar Hill View apartment of defendant No.1 to the plaintiff and his wife at Rs. 33,00,000/- which included registration cost etc. Plaintiff was, however, told that permission for ground floor space has been applied for and there was 99% chance of getting the same from GMDA. He was further told that in case permission was not granted, he would be provided contiguous two bed room apartment on Guwahati the first floor alongside three bed room apartment at Rs.14,94,200/- agreed to the said proposal and also agreed to pay Rs.33,00,000/-for the entire area. On 22.06.2007 vide two allotment letters plaintiff and his wife were allotted apart/flat bearing No-01/Gr. and apart/flat bearing No. 101/Al measuring 1000 sq. ft and 1350 sq. ft. at Rs.9,30,000/- and Rs.13,50,000/- respectively excluding cost of extra work under construction project 'Meghmallar Hill View', by defendant No.1. Rest Rs.10,20,000/- was, thus, charged for registration and frontage area etc. On 06.07.2007 registered deeds of agreement bearing Nos.8705/07 & 8706/07 were executed by defendant No.1 through defendant No.2 in favor of the plaintiff and his wife respectively for apart/flat bearing No.-01/Gr. and apart/flat bearing No. 101/Al measuring 1000 sq. ft & 1350 sq. ft. respectively for consideration price of Rs. 9,30,000/- & Rs. 13,50,000/- respectively. The defendants failed to obtain NOC in respect of 1000sq.ft. open space on the ground floor. They kept on assuring the plaintiff of getting the permission or NOC stating that requisite steps were taken by them in this regard. The plaintiff, on Bonafide belief, continued to make payment and since 23.06.2006 till 05.09.2008 (on different dates) he and his wife together paid Rs.30,00,000/- to the defendants. The plaintiff paid Rs.12,00,000/- and his wife paid Rs.18,00,000/-.

5. Further case of the plaintiff is that on 23.06.2008 defendant No.2 informed him that frontage in front of 1000 sq. ft. area was not possible to be conveyed. The plaintiff then asked for providing alternative option of two bed room flat contiguous to three bed room flats but the defendants deferred the same till 1 week of July 2008. The plaintiff, on 0

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