K.R. SURESH versus R. POORNIMA & ORS.

Citation: [2025] 6 S.C.R. 22 · Decided: 01-05-2025 · Supreme Court of India · Bench: J.B. PARDIWALA · Disposal: Dismissed

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Judgment (excerpt)

[2025] 6 S.C.R. 22 : 2025 INSC 617
K.R. Suresh 
v. 
R. Poornima & Ors.
(Civil Appeal No. 5822 of 2025)
02 May 2025
[J.B. Pardiwala* and R. Mahadevan, JJ.]
Issue for Consideration
Issue arose as regards the correctness of the order passed by 
the courts below dismissing the suit instituted by the appellant-
purchaser for specific performance of contract; and whether the 
appellant entitled to the refund of the amount purportedly paid as 
advance money.
Headnotes†
Specific Relief Act, 1963 – s.22 – Specific performance 
of contract – Refund of advance money – Agreement for  
sale-ATS between the parties pertaining to suit property for 
a sale consideration – Appellant-purchaser issued cheques 
towards the advance amount – Agreement stipulated 
that balance amount to be paid within four months, and 
in the event of failure, the advance amount would be 
forfeited, and upon failure on part of respondents-owners, 
double the advance amount to be paid to appellant as  
compensation  – Appellant did not pay the balance within 
the agreed time period – Respondent-owners forfeited 
the advance amount and cancelled the agreement, and 
also sold the property to subsequent purchasers – Suit 
for specific performance of the agreement of sale by 
appellants  – Dismissed by trial court as also by the High 
Court – Correctness:
Held: No perversity or illegality in the impugned judgment – Amount 
termed as “advance money” in the agreement for sale-ATS, was 
essentially “earnest money” – It was in the nature of a guarantee 
for the due performance of the contract – It was liable to be 
forfeited in the event that the transaction fell through by reason 
of the default on part of the purchaser – Inclusion of the forfeiture 
clause in the ATS was intended to bind the contracting parties and 
ensure the due performance of the contract – This is particularly 
* Author
[2025] 6 S.C.R. 
23
K.R. Suresh v. R. Poornima & Ors.
significant given the stipulated four-month period for completing 
the sale transaction and the primary object of executing the ATS, 
being the urgency of the respondent-owners which was known 
to the appellant – Findings of the courts below affirming that 
time was of the essence, further substantiates the said intent – 
Stipulated amount under the ATS was in the nature of an earnest 
money deposit and thus, s.74 of the 1872 Act cannot apply to 
the same – Forfeiture clause was fair and equitable rather than 
one-sided and unconscionable, as it imposed liabilities on both 
the parties – Forfeiture of advance money by the respondent was 
lawful and justified as there was breach of contract by the appellant, 
which led to financial losses to the respondents – Furthermore, as 
regards the refund of earnest money, u/s.22(1)(b) it is not a relief 
that automatically flows from a decree for specific performance 
of a sale agreement and must, thus, be explicitly sought – No 
such application for an amendment of the plaint moved before the 
courts below, appellant never prayed for the refund of the advance 
money – Law aids the vigilant, not those who sleep over their 
rights – Contract Act, 1872 – s.74. [Paras 31, 37, 40-42, 61-65]
Specific Relief Act, 1963 – s.22 – Alternative relief of refund 
of earnest money u/s.22 – When: 
Held: Plaint may be amended at any stage of the proceedings to 
enable the plaintiff to seek an alternative relief, including that of 
refund of earnest money, and the courts have been vested with 
wide judicial discretion to permit such amendments – However, 
u/s.22 courts cannot grant such relief suo moto, since the inclusion 
of the prayer clause remains sine qua non for the grant of such 
relief – When an “appropriate case” exists for seeking the said 
relief under this provision, it must be specifically sought either in 
the original plaint or by way of an amendment. [Para 58] 
Contract – Agreement of sale – Forfeiture of advance money – 
Difference between “advance money” and “earnest money”:
Held: Terms “advance money” and “earnest money” are often 
used interchangeably – Word “advance” means money in whole 
or in part, forming the consideration of an agreement paid before 
the same is completely payable – Word “earnest” stands for a 
sum of money given for the purpose of binding a contract, which 
is forfeited if the contract does not go off and adjusted in price if 
the contract goes through. [Paras 30-31]
24
[2025] 6 S.C.R.
Supreme Court Reports
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