Supreme Court restores a 1979 specific performance decree, holding it inequitable to undo a completed sale decades later through monetary refund.
The Supreme Court has held that it would be inequitable to undo a sale that had already been executed pursuant to a decree of specific performance decades earlier merely by directing refund of an enhanced amount. The Court restored the Trial Court’s decree in favour of the plaintiff, who had obtained ownership and possession of the property through a court-executed sale in 1979.
A Bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran delivered the judgment on September 15, 2026, in Sobaran Singh (Dead) Through Lrs. v. Gordhan Singh (Dead) Thr. Lrs., Civil Appeal No. 12945 of 2026, arising from SLP(C) No. 27465 of 2016. The judgment is reported as 2026 INSC 1005.
Dispute Originated From 1975 Agreement To Sell
The dispute concerned an agreement to sell dated June 16, 1975, relating to approximately five bighas of agricultural land. Under the registered agreement, the property was agreed to be sold for ₹20,000, out of which ₹5,000 was paid as advance.
The plaintiff subsequently instituted a suit seeking specific performance of the agreement after the defendant failed to complete the transaction. The Trial Court decreed the suit for specific performance on February 28, 1979.
Pursuant to the decree, the sale was executed through the Court on June 7, 1979. The plaintiff thereafter remained in possession of the property.
The defendant had disputed the nature of the transaction, contending that the agreement was connected with a loan and was intended as security. The Trial Court, however, accepted the plaintiff’s case and decreed specific performance.
First Appellate Court Reversed Trial Court Decree
The matter subsequently reached the First Appellate Court, which reversed the Trial Court’s decree. It held that the plaintiff had not sufficiently established readiness and willingness to perform his part of the agreement and directed refund of the advance amount with interest.
The matter then reached the High Court in second appeal.
The High Court upheld the Trial Court’s findings on several aspects of the dispute but nevertheless modified the relief. Instead of allowing the completed transaction to stand, it directed an enhanced refund of ₹15 lakh with interest, purportedly to “maintain equity”.
The plaintiff challenged this decision before the Supreme Court.
Supreme Court Examines Effect Of Completed Sale
The Supreme Court focused on the fact that the specific performance decree had not remained merely on paper. It had already culminated in execution of the sale through the Court in 1979, followed by the plaintiff’s continued possession of the property.
The Bench found that this factual position was materially different from a case where a decree for specific performance had not yet been acted upon.
The Court observed that the plaintiff had parted with the consideration decades earlier and had obtained ownership and possession pursuant to the court-executed sale. In these circumstances, directing refund decades later would effectively disturb a transaction that had already been completed.
The Supreme Court accordingly held that equity could not be invoked in a manner that would undo the completed specific performance transaction.
Equity Favoured Plaintiff Who Had Remained In Possession
The Court noted that the plaintiff had remained in possession since 1979. The litigation had continued for several decades, but the sale agreement had ultimately “come to fruition” through the court-executed sale.
Against this background, the Court held that equity had to be applied in favour of the plaintiff, who had parted with the consideration more than four decades earlier and had obtained both ownership and possession.
The Supreme Court therefore rejected the approach of substituting the completed sale with a substantially enhanced monetary refund.
Trial Court Decree Restored
The Bench allowed the appeal and reversed the decisions of the First Appellate Court and the High Court. The Trial Court’s decree was restored in its entirety.
The Court specifically directed that the plaintiff’s possession could not be interfered with at this stage.
The defendant had deposited ₹15 lakh pursuant to the High Court’s judgment. The Supreme Court directed that this amount, along with any interest accrued on it, be refunded to the defendant within one month.
The appeal was accordingly allowed and pending applications, if any, were rejected.
Significance Of The Ruling
The judgment highlights the importance of considering the stage at which a decree for specific performance has been acted upon. Where a sale has already been executed pursuant to such a decree and possession has followed, a subsequent attempt to replace the completed transaction with monetary compensation or refund can have consequences far beyond merely adjusting the equities between the parties.
The ruling also demonstrates that equitable considerations cannot be applied in isolation from the factual history of the litigation. In the present case, the Supreme Court considered the decades that had passed, the court-executed sale, the consideration already paid and the plaintiff’s continued possession before restoring the original decree.
The decision is therefore significant for disputes involving specific performance, completed property transactions, equitable relief and long-standing possession. Further developments in property and contract law can be followed through [The Legal Observer’s national legal coverage].
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