The right to refund of an admitted payment under a sales agreement is not invalidated by the omission of a secondary contract. A defendant retaining the principal is liable for interest throughout the litigation, as they could have deposited funds in court to stop interest accrual.

Headnote:(A) Code of Civil Procedure, 1908 - Order XII Rule 6 - Specific Relief Act, 1963 - Suit for specific performance - Alternative prayer for refund of consideration - Entitlement to interest - Held, the right to recover an admitted sum paid towards a sale agreement remains valid despite the non-disclosure of a parallel agreement, provided the total amount claimed as paid is established. (Para 39)

(B) Interest - Liability - Mitigation - A party retaining funds paid under an agreement cannot claim exemption from paying interest on the grounds that the opposing party pursued a legal remedy for specific performance or obtained a stay order, particularly when the party retaining the funds failed to deposit the amount in court to stop the accrual of interest. (Paras 41, 43)

Facts of the case:
The claimant filed a suit for specific performance of an agreement to sell property, alternatively seeking a refund of the amount paid with interest. The respondent contended that the suit was based on incomplete disclosure, as a second agreement existed for the same property. The trial court decreed the suit for the recovery of the paid amount along with interest. The respondent appealed, arguing that the concealment of the second agreement and the claimant's pursuit of a specific performance decree disentitled them to interest.

Findings of Court:
The court observed that the receipt of the principal amount was admitted by the respondent. It held that the claimant's right to pursue a primary relief of specific performance did not negate their entitlement to interest, particularly when the respondent had the opportunity to discharge their liability by depositing the funds in court but failed to do so.

Issues: Whether the non-disclosure of a concurrent agreement to sell invalidates the claim for recovery of an admitted payment; whether a defendant is absolved from paying interest solely because the plaintiff pursued litigation for specific performance.

Ratio Decidendi: Persistence in the pursuit of a legal remedy for specific performance does not preclude a party from claiming interest on an admitted principal sum, as the respondent remains in possession of the funds and retains the ability to mitigate liability by depositing the same into the court.

Result: Appeal dismissed.

Table of Content
1. establishment of contractual obligations within the agreement to sell. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7)
2. parties' contentions regarding non-disclosure and breach of contract. (Para 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18)
3. procedural history and grievances regarding interest and property status. (Para 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34)
4. liability to pay interest on funds retained despite litigation. (Para 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45)

JUDGMENT :

NEENA BANSAL KRISHNA, J.

1. Appeal under Section 96 read with Order XLI Rule 1 of CPC has been filed on behalf of the Appellant Manjit Singh against Final Order and Decree dated 09.04.2021, whereby Suit of the Plaintiff / Respondent for Specific Performance, Damages, etc., has been decreed against Appellant for Rs.1,30,00,000/- along with proportionate cost and pre-Suit interest with effect from 25.10.2011 @ 12% per annum, pendente-lite interest @ 6% per annum, in terms of alternate prayer in the Suit.

2. Plaintiff / Respondent M/s Capitol Estates Pvt. Ltd. filed the Suit bearing CS No.10563/2016 for Specific Performance of Agreement to Sell dated 03.11.2009 and in the alternative sought refund of sum of Rs.1,30,00,000/- along with interest @ 24% per annum paid by the Plaintiff Company under the Agreement to Sell and also to award Damages on account of non-performance of Agreement to Sell by the Defendant.

3. Facts and briefs, as narrated in the Plaint were that the Plaintiff Company was in the business of real estate investment and the Directors were interested in purchasing the Apartment for giving it on rent for the time being and later for their personal use. The two Directors in the Plaintiff Company were, Mr. Deepak Manchanda and his wife Mrs. Renu Manchanda, each holding 50 percent of share in the Company. As such, the Company is an alter ego of Mr. Deepak Manchanda and his wife Mrs. Renu Manchanda, who were currently residing in an Apartment adjacent to the Property in question.

4. The Plaintiff entered into an Agreement to Sell dated 03.11.2009 with the Defendant / Appellant Manjit Singh in respect of entire First Floor, in the proposed Building on Plot No.H-31, Masjid Moth, Greater Kailash-II, New Delhi (admeasuring 1,500 square feet) comprising of three bedrooms with attached bathroom, drawing, dining, kitchen, balcony in front and rear and other details along with servant quarters on the terrace of Third Floor with attached bathroom (admeasuring 100 square feet) with two reserved car parking on the Ground Floor, for a total sale consideration of Rs.1,70,00,000/-. A sum of Rs.5,00,000/- were paid at the time of the execution of the Agreement to Sell as the booking amount and Rs.95,00,000/- were linked to the construction of the building, within next 12 months as per Annexure-II of the Agreement. The remaining Rs.70,00,000/- were to be paid at the time of handing over of physical possession of the Apartment and the execution of the Sale Deed, in the name of the Plaintiff Company.

5. Clause 9 of the Agreement provided that in the event Defendant fails to execute and register the Sale Deed in favour of the Plaintiff Company, it shall be entitled to enforce the Agreement, apart from its other Rights. It also provided that if, on account of circumstances beyond the control of the Defendant, the work of the Apartment is not completed on or before 31.10.2010, then on the request of the Defendant, Plaintiff shall extend the time of the registration of the Sale Deed and delivery of possession till 30.11.2010. If there was a delay beyond that date, the Plaintiff Company would be entitled to claim interest at the rate of 24% per annum, on the price paid till the registration of the Sale Deed.

6. The Plaintiff Company asserted that a total sum of Rs.1,30,00,000/- had been paid. In fact, excess amount of Rs.30,00,000/- was also paid, even though the same was not due on the said date. The Defendan

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Judicial Analysis