Emphasising the principle that “the law aids the vigilant, not those who sleep over their rights,” the Supreme Court on Friday upheld a Karnataka High Court decision in a property dispute concerning the forfeiture of Rs 20 lakh paid as part of a sale agreement in Bengaluru.
A bench comprising Justices J B Pardiwala and R Mahadevan dismissed the appeal filed by the buyer, affirming that no relief could be granted since he neither fulfilled his contractual obligations nor sought appropriate relief through amendment of his plaint.
The dispute stemmed from a July 2007 agreement to purchase a property valued at Rs 55.50 lakh. As per the agreement, the appellant paid Rs 20 lakh as part of the total consideration, with the balance to be paid within four months. However, he failed to make the remaining payment or seek any extension of time.
The appellant initially approached the trial court seeking specific performance of the agreement—essentially asking the court to compel the seller to execute the sale deed and hand over the property. The trial court rejected the suit, a decision later upheld by the Karnataka High Court. The High Court also denied a refund of the Rs 20 lakh on the grounds that the appellant had never sought such a remedy in his suit.
Upholding the High Court’s view, the Supreme Court said the appellant had ample opportunity to amend his plaint to seek refund of the advance money but failed to do so. “No such application for amendment of the plaint was moved either before the trial court or during the course of the first appeal,” the bench noted.
The court further clarified the distinction between “advance money” and “earnest money,” observing that the Rs 20 lakh paid was, in essence, earnest money—a guarantee for performance of the contract, liable to be forfeited in case of default.
“There was an explicit forfeiture clause in the agreement, which stipulated that the advance money paid would stand forfeited in the event of default by the buyer in fulfilling the terms of contract,” the bench observed, adding that the clause was “fair and equitable” as it imposed mutual obligations.
Since the appellant neither performed his contractual obligations nor pursued an amendment to seek refund, the Supreme Court held there was no “perversity or illegality” in the High Court’s verdict. It concluded by reiterating, “The law aids the vigilant, not those who sleep over their rights.”
