2026 INSC 700 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 2448 - 2449 OF 2023

JASPAL SINGH …. APPELLANT

VERSUS

ASHWANI KUMAR .... RESPONDENT

J U D G M E N T

ALOK ARADHE, J.

1. These appeals which emanate from a judgment passed in

Regular Second Appeal and a n order passed in Review

Petition by the High Court of Punjab & Haryana at

Chandigarh (“High Court”) in RSA No. 3619 of 2012 (O&M)

and RA-RS No. 87 of 2019 take exception to the judgment

dated 08.02.2019 and order dated 10.07.2019 respectively,

by which Regular Second Appeal filed by the respondent

was allowed and the review petition filed by the appellant

has been dismissed.

FACTS

2. The appellant (plaintiff) entered into an Agreement to Sell

dated 22.06.2003 with the respondent (defendant) for

purchase of land admeasuring 12 marlas, on which a

2

factory stood, situated at village Gowar/Gohwar, Tehsil

Phillaur, District Jalandhar, Punjab (“the subject property”).

The respondent, a co-owner of the subject property along

with his brother, agreed to sell his half share for a

consideration of Rs.12,50,000/-. An earnest money amount

of Rs.9,00,000/- was paid by the appellant at the time of

execution of the Agreement, which stipulated 22.06.2004 as

the date for execution of the Sale Deed, further providing

that if the Sale Deed could not be executed for any reason,

the respondent would refund the earnest money.

3. By a further Agreement dated 21.06.2004, the date for

execution of the Sale Deed was extended by mutual consent

to 22.07.2004. A third Agreement dated 21.07.2004

recorded the receipt by the respondent of a further sum of

Rs.60,000/-, extended the date for execution of the Sale

Deed to 22.01.2005 for payment of the balance

consideration, and provided that all other terms of the first

Agreement would continue to apply.

4. The appellant appeared before the Sub-Registrar on

20.01.2005 and 24.01.2005 – the Sub-Registrar’s office

having remained closed on 21.01.2005, and 22.01.2005 and

3

23.01.2005 being Saturday and Sunday respectively, but

the respondent did not attend.

5. In 2006, the appellant instituted a suit for specific

performance of the contract founded on the Agreement

dated 22.06.2003 and its extensions dated 21.06.2004 and

21.07.2004, with an alternative prayer for recovery of

Rs.19.20 lakh (Rs.9.60 lakh as earnest money and an equal

sum as damages).

6. The respondent, in his written statement, denied execution

of the Agreement and pleaded that true market value of the

subject property exceeded Rs.50 lakh. He asserted that the

documents were executed as collateral security for a

separate arrangement to facilitate his travel abroad through

a travel agent associated with the appellant, under which he

had signed blank papers and issued a cheque as security

for a Rs.15,50,000/- transaction, and that the appellant, in

connivance with the deed-writer and marginal witnesses,

converted these blank papers into an Agreement to Sell.

JUDGMENT OF THE TRIAL COURT

7. By judgment and decree dated 30.04.2010, the Trial Court

held that the appellant had proved execution of the

4

Agreement to Sell and its extensions, that the respondent

had accepted Rs.9 lakh as consideration, that the date for

execution of the Sale Deed stood validly extended up to

22.01.2005 and that the appellant was ready and willing to

perform his obligations. It nonetheless held that the

Agreement did not provide for enforcement of the Sale Deed

through the process of law in the event of default, but only

for the refund of the earnest money, and accordingly

declined specific performance, decreeing instead recovery of

Rs.9 lakh with interest at 9% per annum till institution of

the suit, and pendente lite and future interest at 6% per

annum till realisation.

JUDGMENT OF THE FIRST APPELLATE COURT

8. In appeal, the First Appellate Court, by judgment and

decree dated 01.05.2012, affirmed that the appellant had

proved execution of the Agreement through the scribe and

attesting witnesses, found the respondent’s version

regarding the VISA arrangement implausible for want of any

handwriting or documentary evidence and in view of the

respondent’s admitted signatures on all three documents,

held that the appellant had discharged the burden of

5

proving his readiness and willingness. On the question of

specific performance, it held that the mere absence of an

express clause enabling enforcement through court did not

bar the relief; that the Agreement, read with its extensions,

disclosed a continuing intention of the parties to complete

the sale of immovable property; and that time was not of the

essence. It accordingly set aside the decree of the Trial

Court and decreed specific performance in favour of the

appellant.

JUDGMENT OF THE HIGH COURT

9. Aggrieved, the respondent preferred a Second Appeal.

During its pendency, the Sale Deed was executed on

29.04.2013 in favour of the appellant in execution of the

decree of the First Appellate Court, and possession of the

subject property was delivered to him.

10. By judgment dated 08.02.2019, the High Court affirmed the

concurrent findings of the courts below on execution of the

Agreement to Sell, payment of earnest money , and the

appellant’s readiness and willingness. It nevertheless held

that the appellant had suppressed, in the plaint, a separate

transaction under which he had received Rs.3,00,000/-

6

from the respondent; that although this receipt was denied

in the replication, the appellant admitted in cross -

examination that a cheque of Rs.2,00,000/- drawn on the

respondent’s account was encashed on 11.03.2004 towards

a loan not pleaded in the plaint; and that the repeated

extensions of the date for execution of the Sale Deed,

coupled with the absence of any clause for specific

performance, indicated that the transaction was not

genuine. On this basis, the High Court set aside the decree

of the First Appellate Court and restored that of the Trial

Court.

11. The appellant’s subsequent review petition was dismissed

by order dated 10.07.2019, the High Court finding no

ground for review. These appeals impugn both the judgment

dated 08.02.2019 and the order dated 10.07.2019.

SUBMISSIONS

12. Shri R.K. Kapoor, learned counsel for the appellant

submitted that the Second Appeal had become infructuous

upon execution of the Sale Deed and delivery of possession

in execution of the First Appellate Court’s decree; that the

High Court erred in holding that the Agreement contained

7

no clause for enforcement of the Sale Deed through court;

and that the finding attributing the payment to a travel

arrangement was perverse, there being no agreement

between the parties for payment of Rs.15.50 lakh. It was

accordingly urged that the impugned judgment and order be

set aside. In support of the abovesaid submissions, the

reliance has been placed on the decisions of this Court

1

.

13. Ms. Nina R. Nariman, learned counsel for the respondent

submitted that the execution proceedings remain subject to

the outcome of the appeal and the plea that the Second

Appeal had become infructuous was misconceived; that the

construction of a document is a question of law bearing on

the rights of parties; and that specific performance, being

discretionary and equitable, required the court to weigh the

conduct of parties, including suppression of material facts,

and to balance the equities. Reliance was placed on the

circumstances that the Agreement was intended only as

security for facilitating the respondent’s travel abroad, the

appellant’s suppression of the receipt of Rs.2,00,000/-, the

joint ownership of the subject property with the

1

M.L. Devender Singh & Ors. v. Syed Khaja, (1973) 2 SCC 515; P. D’Souza v. Shondrilo

Naidu (2004) 6 SCC 649; P.S. Ranakrishna Reddy v. M.K. Bhagyalakshmi and Anr.

(2007) 10 SCC 231, and Man Kaur (Dead) by LRs. v. Hartar Singh Sangha, (2010) 10

SCC 512

8

respondent’s brother, and the unreasonably long and twice-

extended timeline for execution of the Sale Deed, in support

of the submission that the grant of specific performance

would be inequitable and warranted no interference in

appeal

2

.

ANALYSIS

14. We have considered the rival submissions and perused the

record. At the outset, it must be noticed that the High Court

did not itself disturb the concurrent findings of fact

recorded by the Trial Court and the First Appellate Court on

execution of the Agreement to Sell dated 22.06.2003 and its

two subsequent extensions, or on the appellant’s readiness

and willingness to perform his part of the contract and

payment of earnest money. Two questions, therefore, arise

for consideration: first, whether, upon the facts so found,

the appellant was entitled to a decree of specific

performance; and second, whether the High Court was, in

2

Inderchand Jain (Dead) through LRs. v. Motilal (Dead) through LRs, (2009) 14 SCC

663 at Para 29; Chander Bhan (D) through LRs. Sher Singh v. Mukhtiar Singh & Ors.,

(2024) 13 SCC 122 at Paras 19 and 20; Pankajakshi (Dead) through LRs. & Ors. v.

Chandrika & Ors., (2016) 6 SCC 157 at Paras 25 -27 (Constitution Bench); Kirodi

(Since Deceased) through LRs. v. Ram Parkash & Ors., (2019) 11 SCC 317 at Para 9;

Satyender & Ors. v. Saroj & Ors., (2022) 17 SCC 154 at Paras 15, 16; Kannan (Dead)

through LRs. & Ors. v. V.S. Pandurangam (Dead) through LRs. & Ors, (2007) 15 SCC

157 at Paras 7, 8; Pankaj Bhargava & Anr. v. Mohinder Nath & Anr., (1991) 1 SCC 556

at Paras 9-12; Chandrabhan (Deceased) through LRs. & Ors. v. Saraswati & Ors., 2022

SCC OnLine SC 1273 at Para 33; Zarina Siddiqui v. A. Ramalingam, (2015) 1 SCC 705

at Para 33; T. Ravi & Anr. v. B. Chinna Narasimha & Ors. and Jayakantham & Ors. v.

Abaykumar, (2017) 5 SCC 178 at Para 7

9

any event, justified in law in disturbing the decree of the

First Appellate Court on the other grounds assigned by it.

We briefly address the governing framework of a second

appeal which is well-settled before turning, in sequence, to

each of these questions.

A. THE SCOPE OF INTERFERENCE WITH

CONCURRENT FINDINDS OF FACT IN A SECOND

APPEAL UNDER SECTION 100 OF THE CODE OF CIVIL

PROCEDURE

15. It is trite law that First Appellate Court is the final court of

fact and the High Court, in a Second Appeal cannot

interfere with findings of fact merely because it would have

arrived at a different conclusion on the appreciation of the

same evidence; interference is permissible only where the

findings are recorded without evidence, or by ignoring

material evidence, or are otherwise vitiated by perversity.

This test finds its origin in a decision of this Court rendered

in 1962

3

and was reaffirmed later

4

. Subsequently, the

aforesaid principles have been reiterated in recent years to

3

Sir Chunilal v. Mehta & Sons, Ltd. v. Century Spinning & Manufacturing Co. Ltd.;

AIR 1962 SC 1314

4

Kondiba Dagadu Kadam v. Savitribai Sopan Gujar & Ors.; (1999) 3 SCC 722

10

state that a finding of fact will not be disturbed unless it is

vitiated for want of perversity

5

.

B. THE BAR OF SPECIFIC PERFORMANCE FOUNDED ON

THE EARNEST MONEY CLAUSE

16. The decisive ground on which the High Court declined the

decree for specific performance was the absence, in the

Agreement to Sell, of an express clause providing for specific

performance. The relevant clause reads thus:

“Both the parties would remain abide to

get the sale deed executed on the date

stipulated above and in case the sale deed

could not be executed due to certain

reason then first party would be bound to

return the earnest money to the second

party.”

17. The High Court construed this clause as conferring upon

the respondent an option to walk away from the bargain

upon refund of the earnest money, holding that the absence

of an express stipulation enabling the appellant to enforce

the Agreement through court rendered the remedy of

specific performance unavailable to him. In our opinion,

such a construction cannot be sustained, either on the

plain terms of the clause or on the settled position of law.

5

Jaichand (Dead) Through LRs. & Ors. v. Sahnulal & Anr., 2024 SCC OnLine SC 3864

and Russi Fisheries P. Ltd. & Anr. v. Bhavna Seth & Ors., 2026 SCC OnLine SC 555

11

18. Section 23 of the Specific Relief Act, 1963, (the 1963 Act)

which re-enacts in more explicit terms, the principle earlier

contained in Section 20 of the Specific Relief Act, 1877,

provides that a contract otherwise proper to be specifically

enforced may be so enforced notwithstanding that a sum is

named in it as payable in the event of breach, unless the

court is satisfied, having regard to the terms of the contract

and the attending circumstances, that the sum was named

only to give the defaulting party an option of paying money

in lieu of performance and not merely to secure

performance.

19. We may refer to the principles stated in Sir Edward Fry’s

“Treatise on the Specific Performance of Contracts”

6

which

have been held to be in consonance with the principles in

Section 20 of the Specific Relief Act, 1877 and Section 23 of

the 1963 Act which read as under:

“S. 141. The question always is, What is the

contract? Is it that one certain act shall be

done, with a sum annexed, whether by way

of penalty or damages, to secure the

performance of this very act? or is it that one

of two things shall be done at the election of

the party who has to perform the contract,

namely, the performance of the act or the

6

Fry A Treatise on the Specific Performance of Contracts, Sixth Edition; Page Nos. 65

and 66

12

payment of the sum of money? If the former,

the fact of the penal or other like sum being

annexed will not prevent the Court’s

enforcing performance of the very act, and

thus carrying into execution the intention of

the parties:

7

if the latter, the contract is

satisfied by the payment of a sum of money,

and there is no ground for proceeding

against the party having the election to

compel the performance of the other

alternative.

S. 142 From what has been said it will be

gathered that contracts of the kind now

under discussion are divisible into three

classes :–

(i) Where the sum mentioned is strictly a

penalty – a sum named by way of securing

the performance of the contract, as the

penalty in a bond;

(ii) Where the sum named is to be paid as

liquidated damages for a breach of the

contract;

(iii) Where the sum named is an amount

the payment of which may be substituted for

the performance of the act at the election of

the person by whom the money is to be paid

or the act done.

Where the stipulated payment comes under

either of the two first-mentioned heads, the

Court will enforce the contract, if in other

respects it can and ought to be enforced, just

in the same way as a contract not to do a

particular act, with a penalty added to

secure its performance or a sum named as

liquidated damages, may be specifically

7

Howard v. Hopkins, 2 Atk. 371; French v. Macale, 2 Dr. & War. 269; Roper v.

Bartholomew, 21 Pri. 797.

13

enforced by means of an injunction against

breaking it. On the other hand, where the

contract comes under the third head, it is

satisfied by the payment of the money, and

there is no ground for the Court to compel

the specific performance of the other

alternative of the contract

8. It will be

convenient to consider the three classes of

cases separately.”

20. The said principles have been referred to with approval by

this Court

9 wherein this Court held that Section 23 of the

1963 Act contains a comprehensive statement of the

principles governing construction of such clauses and if

mere naming of a sum of damages or penalty were by itself

sufficient to defeat the claim for specific performance of a

contract for transfer of immovable property, the provision

would be rendered wholly meaningless. It was reiterated

that the mere naming of an amount which may sound in

damages is not, by itself, sufficient to defeat a claim for

specific performance unless it is clear on the facts that the

sum was named in lieu of performance, and that a party in

breach cannot resist specific performance merely on the

8

‘There are.” Said Lord Bramwell, in Legh v. Lillie, 6 H. & N. 165, 171; 30 L. J. Ex.

25, 28, “three classes of covenants; first, covenants not to do particular acts, with a

penalty for doing them, which are within the 8 & 9 Will. III. c. 11: secondly,

covenants not to do an act, with liquidated damages to be paid if the act is done,

which are not within the statute: and thirdly, covenants that acts shall not be done

unless subject to a certain payment.”

9

M.L. Devender Singh & Ors. (supra)

14

ground that the agreement contains no express stipulation

for that relief

10.

21. Tested on this touchstone, the clause in question does no

more than provide that, in case the Sale Deed could not be

executed for any reason, the respondent would be bound to

refund the earnest money. There is neither any language of

election, nor any stipulation entitling the respondent to

discharge the bargain, at his option, by payment of any sum

in lieu of executing the Sale Deed. The clause records no

more than bare consequence flowing from non-execution of

the Sale Deed; the stipulation for refund operates as a

deterrent reinforcing the obligation to perform, and not as a

substitute for it. It protects the purchaser’s minimum

entitlement in the event of default, without in any manner

curtailing his right to insist upon performance. To hold

otherwise would place a premium on the conduct of a

respondent who received a substantial part of the

consideration for immovable property and twice extended

the time for execution of the Sale Deed – a construction that

would defeat, rather than serve, the object of Section 23 of

the 1963 Act. This, in our view, is the central infirmity in

10

Kamal Kant Jain v. Surinder Singh (Dead) Through LRs.; (2019) 11 SCC 432

15

the impugned judgment on the question of specific

performance. Having answered this question, we turn next

to whether the High Court was, in any event, justified in

disturbing the concurrent findings of fact recorded by the

Trial Court and the First Appellate Court.

C. THE HIGH COURT’S TRANSGRESSION OF THE

LIMITS OF SECOND APPEAL

22. It bears emphasis, at the very outset, that even the High

Court did not disturb the concurrent findings of fact

recorded by the Trial Court and the First Appellate Court on

execution of the Agreement to Sell dated 22.06.2003 and its

extensions dated 21.06.2004 and 21.07.2004, or on the

appellant’s readiness and willingness to perform his part of

the contract. These findings, arrived at concurrently and

affirmed by the High Court itself, must therefore be taken as

conclusively established. Notwithstanding this affirmance,

the High Court proceeded to rest its ultimate conclusion on

a fresh appraisal of surrounding circumstances and

inferences that ran counter to, and were unsupported by,

the very findings it professed not to disturb. In our opinion,

the High Court transgressed the limits of its jurisdiction

16

under Section 100 of the Code of Civil Procedure (CPC)

discussed in Part A above, for the following reasons:

(i) Reappreciation of the Fraud Defence Despite

Concurrent Findings to the Contrary

23. The defence set up to the suit was, in substance, a plea of

fraud, that the respondent’s signatures were obtained on

blank papers under the guise of a wholly different

transaction relating to travel documentation, and that the

Agreement to Sell was a fabrication superimposed upon

those signatures. The Trial Court and the First Appellate

Court, upon meticulous examination of the evidence of the

scribe, the marginal witnesses, the stamp vendor and the

lambardar, concurrently found that the Agreement and its

extensions were executed by the respondent with full

knowledge of their contents. It is significant that the

respondent, who executed the documents in English,

examined no handwriting or document expert to

demonstrate that the body of the Agreement was

superimposed upon signatures obtained on blank paper,

nor did he explain how his signatures came to appear on

three separate documents executed over a period exceeding

three years. His admission of these signatures amounts, in

17

law, to an admission of the facts contained in the

documents

11

. The respondent, therefore, signally failed to

establish the defence taken in the written statement.

Despite this, and despite not upsetting this finding in terms,

the High Court permitted the very suspicion underlying the

discarded defence to colour its assessment of the

transaction – an aspect it ought not to have revisited.

24. In this connection, the High Court placed considerable

emphasis on the appellant’s suppression, in the plaint, of a

separate transaction under which a cheque of

Rs.2,00,000/- drawn on the respondent’s account had been

encashed on 11.03.2004, treating this omission as lending

credence to the respondent’s case that the Agreement was

executed only as security for the travel arrangement. We are

unable to accept this reasoning. While the respondent had,

in his written statement, pleaded that cheques were issued

to the appellant by himself and by his friends towards the

alleged Rs.15,50,000/- travel transaction, he adduced no

material connecting this particular cheque, either in point of

quantum or of time, to the specific terms of that transaction

as pleaded, namely an advance of Rs.3 lakhs, a further

11

Sitaram Motilal Kalal v. Santanuprasad Jaishankar Bhatt, AIR 1966 SC 1697

18

Rs.3.50 lakhs by cheque, and the balance of Rs.9 lakhs

upon approval of his visa. The appellant, for his part,

explained the amount in cross-examination as a loan, an

explanation that remained unrebutted on the record.

Suppression of a collateral financial dealing between parties

who admittedly had continuing dealings with one another

may reflect on the completeness of the plaint and go to the

credibility of the appellant on that peripheral matter, but it

does not, without more, establish that the Agreement to

Sell, itself proved through the unimpeached testimony of the

scribe and the attesting witnesses, was a fabrication

superimposed on blank signatures. An omission bearing on

a collateral transaction cannot be permitted to do the work

of positive proof of fraud that the respondent himself failed

to discharge, particularly where the cheque relied upon was

not shown to correspond to the structured terms of the very

arrangement he had pleaded, and the High Court erred in

allowing this circumstance to colour its view of the

genuineness of the Agreement.

(ii) Suspicion Cast on the Genuineness of the

Transaction Merely Because the Subject Matter was

an Undivided Share

19

25. Nor could the mere fact that the subject matter of the

Agreement was an undivided half share in a jointly owned

property support an inference that the transaction was not

genuine. A co-owner’s undivided share in immovable

property is a valid and marketable subject matter of

transfer, and an Agreement to Sell such a share cannot be

viewed with suspicion merely because the vendor’s co -

sharer brother was not made a signatory. It is well settled

that a transfer of an undivided share is a legally recognised

and enforceable transaction in its own right, the only

consequence being that the transferee’s remedy for actual

enjoyment of the property lies in a suit for partition, and a

consequence bearing upon the mode of enjoyment following

the decree; has no bearing whatsoever on the genuineness

or enforceability of the underlying Agreement to Sell

12

.

The

High Court, in treating the joint ownership of the subject

property as a circumstance casting doubt on the

genuineness of the transaction, therefore fell into error, and

assigned no cogent reason of its own for departing from this

settled position.

12

Sidheshwar Mukherjee v. Bhubneshwar Prasad Narain Singh & Ors.; AIR 1953 SC

487; M.V.S. Manikayala Rao v. M. Narasimhaswami & Ors.; AIR 1966 SC 470; and

Ramdas v. Sitabai & Ors.; (2009) 7 SCC 444: AIR 2009 SC 2735

20

(iii) Mischaracterisation of the Extended Timeline as

Indicative of a Sham Transaction

26. Equally unsustainable is the interference that the time gap

between the Agreement and the stipulated date for

execution of Sale Deed, and the two extensions granted,

indicated that the transaction was not genuine. In any

event, the delay was not unreasonable: the date originally

fixed as 22.06.2004 was extended, with the consent of

parties, only to 22.01.2005 – a total period of barely seven

months from the original date. There was, moreover, no

material on record to substantiate the respondent’s plea

that the parties had entered into a separate transaction

relating to his travel to the USA. Extensions of time granted

by consent, without more, are wholly consistent with the

genuineness of the transaction cannot, by themselves,

found an interference to the contrary.

(iv) Absence of Any Finding of Perversity

27. Finally, and most fundamentally, the High Court, in the face

of these concurrent and well-reasoned findings, travelled

well outside the confines of its jurisdiction under Section

100 of the CPC. It displaced the findings of the Trial Court

and the First Appellate Court on the genuineness of the

21

transaction without adverting to the evidence on which

those findings rested and without recording any finding of

perversity – an exercise impermissible in law, for the

reasons discussed in Part A above. The findings on

execution of the Agreement, on the appellant’s readiness

and willingness, and on the falsity of the respondent's

defence were pure findings of fact, unassailable in second

appeal, and the High Court erred in reopening them without

so much as characterising them as perverse.

CONCLUSION

28. For the reasons recorded above, both as to the true

construction of the earnest money clause and as to the

limits of the High Court’s jurisdiction under Section 100 of

the CPC, we are of the considered opinion that the High

Court erred in disturbing the judgment and decree of the

First Appellate Court. The findings recorded by the Trial

Court and the First Appellate Court that (i) the Agreement to

Sell dated 22.06.2003 and its extensions dated 21.06.2004

and 21.07.2004 were validly executed by the respondent; (ii)

the appellant was ready and willing to perform his part of

the contract; and (iii) the defence of fraud setup by the

22

respondent was not established, stands restored. The clause

requiring refund of earnest money in the event the Sale

Deed could not be executed does not , on its true

construction, operate as a bar to a decree for specific

performance, nor does it furnish a ground on which such a

relief can be declined.

29. The judgment dated 08.02.2019 passed in RSA No. 3619 of

2012 (O&M) and Order dated 10.07.2019 passed in RA -RS

No.87 of 2019 passed by the High Court are quashed and

set aside. The judgment and decree dated 01.05.2012

passed by the First Appellate Court in C.A. No.0100204 of

2010 is restored.

30. The appeals are accordingly allowed. There shall be no order

as to costs.

31. Pending application(s), if any, shall stand disposed of.

……………………………………………….J.

[K.V. VISWANATHAN]

……………………………………………….J.

[ALOK ARADHE]

NEW DELHI;

JULY 14, 2026