Seller Took Your Advance and Backed Out? Forcing Completion of a Property Deal in Delhi

What specific performance means, and what changed in 2018

Specific performance is an order directing a party to a contract to do what he promised. In a property deal, it means the court directs the seller to execute and register a sale deed in the buyer's favour on receiving the balance price, and if he still refuses, the court can have the deed executed through its own officer. The buyer gets the property itself, not just money.

Until 1 October 2018, specific performance was a discretionary relief. Courts could refuse it even where the buyer proved his case, for reasons such as hardship to the seller or a steep rise in prices, and award money instead. The Specific Relief (Amendment) Act 2018 changed that. Section 10 now says specific performance shall be enforced, subject only to Sections 11(2), 14 and 16. The old discretion under Section 20 has been removed and replaced by a right to substituted performance.

In practice, the amendment has made courts more willing to enforce property agreements, but it has not made the buyer's task easy. The buyer must still prove a valid agreement, prove that he was ready and willing throughout, and sue in time. Whether the 2018 changes apply to agreements signed before October 2018 has been the subject of conflicting Supreme Court rulings and a review, so if your agreement is older, check the current position before relying on the new rule.

Is your agreement to sell enforceable?

Start with the paper. A court will enforce an agreement that identifies the parties, the property, the price and the essential terms, signed by the seller, or by someone with written authority to sign for him. A receipt for earnest money that mentions the property and the price can sometimes be enough. An oral agreement is enforceable in theory but very hard to prove.

An unregistered agreement to sell can be relied upon in a suit for specific performance; the proviso to Section 49 of the Registration Act 1908 allows it as evidence for this purpose. Registration matters more for a buyer who has been put in possession and wants protection of part performance under Section 53A of the Transfer of Property Act, which since 2001 requires the agreement to be registered. Stamp duty matters too. In Delhi, an agreement under which possession is handed over can attract duty close to that of a sale, and an understamped agreement can be impounded and admitted only on payment of duty and penalty.

An agreement to sell does not itself make you an owner. The Supreme Court made this clear in Suraj Lamp and Industries v. State of Haryana (2011), holding that agreements to sell, GPAs and wills do not transfer title. What the agreement gives you is a right to sue for a sale deed. Our guide on whether a GPA sale is valid in Delhi covers buyers holding older GPA documents.

The provisions that decide a specific performance suit

Ready and willing: the question that decides most cases

Most buyers who lose a specific performance suit lose on readiness and willingness. Readiness means the financial capacity to pay the balance; willingness means the intention to complete. Both must exist from the date of the agreement right up to the decree. A buyer who paid a small token, did nothing for two years, and then sued when prices rose will have a hard time.

Proof is documentary. Bank statements showing funds, a home loan sanction letter, fixed deposits that could have been broken, letters and WhatsApp messages asking the seller to fix a date for registration, a draft sale deed sent to him, and a visit to the sub-registrar's office on the agreed date. Courts in Delhi frequently direct the buyer to deposit the balance price in court during the suit as a sign of bona fides. A buyer who cannot or will not deposit when directed rarely gets the decree.

Time is generally not of the essence in agreements for the sale of immovable property, as the Supreme Court held in Chand Rani v. Kamal Rani (1993), unless the agreement or the circumstances show otherwise. But the court in Saradamani Kandappan v. S. Rajalakshmi (2011) cautioned that buyers cannot treat the agreed dates as meaningless, especially where only a small advance was paid. When Advocate B.K. Singh reads a buyer's file, he lays every payment and every message on a single timeline, because gaps of silence on the buyer's side are what the seller's lawyer will look for.

Why sellers back out, and how courts treat each excuse

• The price has gone up. A rise in market value is not a ground to refuse specific performance, especially after 2018. It may become relevant only where the buyer himself delayed.
• A co-owner did not sign. The decree can bind only those who agreed. If the seller owned a half share, the buyer may get a decree for that share, with compensation, or may choose a refund. Check who owns what before paying.
• The title has a defect. If the seller cannot give clear title, the buyer can usually take what title there is or seek a refund with compensation. A seller cannot rely on his own default to escape.
• The buyer defaulted. The seller will say you failed to pay on time. Your proof of readiness answers this. If the agreement made time essence and you really missed the date, your claim weakens.
• It was a loan, not a sale. Some sellers claim the agreement was security for a loan. Courts look at the price, the possession and the conduct of both sides to decide what the transaction really was.
• The seller has died. The agreement binds his legal heirs, who must be impleaded and can be directed to execute the sale deed.

The three-year limit, and the notice that starts the clock

Under Article 54 of the Limitation Act, a suit for specific performance must be filed within three years. If the agreement fixes a date for the sale deed, time runs from that date. If no date is fixed, or the date was extended by conduct, time runs from when the buyer had notice that the seller refused to perform.

A seller's letter or message saying he will not go ahead, or a public notice that he has cancelled the agreement and forfeited the advance, starts the clock. Buyers sometimes keep negotiating for years after such a refusal and then find their suit barred. If the seller has refused in writing, treat that date as the start of your three years and plan to sue well before the end.

The buyer should also send his own legal notice: stating the agreement, the payments made, his readiness to pay the balance, and calling on the seller to execute the sale deed by a fixed date. The notice and the seller's reply, or silence, become evidence of readiness and of refusal. It also flushes out a third-party sale early, when an injunction can still prevent it.

Which court hears the suit in Delhi

A suit for specific performance of an agreement about immovable property is filed where the property is located. For a Delhi property, the forum depends on value, and value in such a suit is the price stated in the agreement; our guide on how court fee is calculated for a property suit in Delhi explains the valuation. An agreement for Rs 3.5 crore goes to the original side of the Delhi High Court; one for Rs 90 lakh goes to the District Judge for that area. The High Court's limit is above Rs 2 crore at present; a proposal to raise it is pending, so check the current limit. Our page on property suits above Rs 2 crore explains how those suits run on the original side.

A property in Gurugram, Noida or Ghaziabad is generally sued over in the courts there, even if the agreement was signed in Delhi, because the decree concerns land outside Delhi. Where the relief can be obtained entirely through the seller's personal obedience and he lives in Delhi, there are limited exceptions, and the choice of forum needs careful thought before filing.

An ordinary agreement to buy a house or a residential plot is not a commercial dispute. The Supreme Court held in Ambalal Sarabhai Enterprises v. K.S. Infraspace (2020) that a dispute over immovable property is commercial only where the property is used exclusively in trade or commerce. So a shop or warehouse deal may go to a commercial court, under the rules explained on our commercial suit page, while a flat purchase goes to an ordinary civil court.

How a specific performance suit runs, step by step

1. Collect and check the documents

   The agreement, receipts, bank entries, title chain of the seller, and every communication. We check who the owners are, whether the agreement is stamped, and how much time remains under Article 54.

2. Send a legal notice

   A notice calls on the seller to execute the sale deed by a fixed date and records your readiness. If a third-party sale is imminent, the suit may be filed without waiting for the notice period to end.

3. File the suit with an injunction application

   The plaint seeks specific performance, possession if applicable, and in the alternative refund of earnest money with compensation, as Section 22 requires these to be specifically claimed. An application under Order 39 asks the court to restrain the seller from selling or encumbering the property.

4. Interim orders and deposit

   The court may restrain any transfer pending the suit and may direct the buyer to deposit the balance price, or part of it, in court. Complying on time is essential.

5. Pleadings and issues

   The seller files a written statement; issues are framed on the agreement, readiness, limitation and any defence such as the transaction being a loan. On the High Court's original side, admission and denial of documents takes place before the Joint Registrar.

6. Evidence and final hearing

   Both sides file affidavits of evidence and are cross-examined. The buyer's bank witness, the attesting witnesses to the agreement and the buyer himself usually give evidence. The court then hears final arguments and passes a decree.

7. Execution of the decree

   If the seller still refuses after the decree, the buyer files for execution. The court can have the sale deed executed and registered through an officer, and order delivery of possession.

Both sides can appeal the decree. If the seller does not pay or perform within the time the court fixes, the other side can return to court under Section 28. Our page on execution of decrees covers the last stage.

Stopping the seller from selling to someone else

The biggest practical risk in a specific performance case is that the seller sells the property to a third party before or during the suit. The decree can still bind a later buyer, but only one who had notice of your agreement or did not pay in good faith. Proving notice years later is uncertain. An injunction restraining sale, obtained at the start, avoids that fight.

Once a suit is filed and the property is clearly described in it, any transfer made during the suit is subject to its outcome under Section 52 of the Transfer of Property Act. If you are already in possession under the agreement, your possession itself is notice to anyone who buys from the seller. Even so, an express order of the court restraining transfer is far more effective, because sub-registrars and banks respond to court orders.

Our page on injunctions to stop an illegal sale or construction explains how interim orders are obtained. In a specific performance suit, the court usually considers the buyer's readiness when deciding whether to grant one, which is another reason to keep your funds documented from day one.

Typical time and cost of a specific performance suit in Delhi

Documents a buyer should gather

If you are the seller

A seller who has genuinely changed his mind should understand that the 2018 amendment has made it harder to escape an agreement simply because prices have risen or the family has second thoughts. If the buyer was ready and willing and sues in time, a decree is a real possibility. Negotiating a higher price, or a refund with fair compensation, is often better than a long suit you may lose.

A seller does have defences where the facts support them: the buyer was not ready with funds, the agreement made time essence and the buyer missed the deadline, the agreement was conditional on something that never happened, the document is not what it appears to be, or the suit is time-barred. Each of these needs evidence, not assertion.

Forfeiting the entire advance is not automatic either. The Supreme Court has held, in cases such as Kailash Nath Associates v. DDA (2015), that forfeiture of a large sum as earnest money is subject to the rule on reasonable compensation in Section 74 of the Indian Contract Act, while a genuine and modest earnest deposit can be forfeited on the buyer's default. A seller who forfeits a large advance and resells may face a claim for refund or for specific performance.

When a refund makes more sense than the property

Not every buyer should insist on the property. Where the seller's title is doubtful, the property is in litigation with others, or the buyer's own circumstances have changed, a claim for refund of the earnest money with interest and compensation may be the wiser course. Section 22 requires the refund to be claimed specifically, ideally as an alternative relief in the same suit, so that if the court refuses specific performance it can still order repayment.

Compensation under Section 21 can be awarded in addition to or in place of specific performance. Where the seller has made it impossible to perform, for instance by selling to a bona fide purchaser without notice, compensation may be the only relief left. Claiming it in the plaint from the start keeps that option open.

A buyer who only wants money back can also consider a simpler money suit, or a summary suit under Order 37 CPC where the claim rests on a written acknowledgement of the amount. For deals with builders and developers, a complaint before the RERA authority or the consumer commission is often faster than a civil suit, and those forums can order refunds with interest.

Mistakes buyers make

• Paying a large advance on a thin document. An agreement without the property clearly described, without all co-owners signing, or without a fixed timetable invites disputes.
• Not checking title first. If the seller's title is defective or the property is mortgaged, enforcing the agreement may bring the problem to you.
• Going quiet after the seller refuses. Silence looks like lack of readiness and lets the limitation period run.
• Not claiming refund in the alternative. Without it, if specific performance is refused, the buyer may have to file a fresh suit for the money, possibly out of time.
• Failing to deposit when directed. Courts treat a missed deposit as strong evidence that the buyer was never ready.
• Waiting for an injunction until the seller has already registered a sale. File early, when the court can still prevent the transfer.

How we approach specific performance cases

We begin with the documents and the dates: the agreement, every payment, every message, and the day the seller refused. From those we decide whether to press for the property, settle, or claim a refund, and whether there is time pressure from Article 54 or an imminent sale. Advocate B.K. Singh's view is that a specific performance suit is won or lost in the first month, by how well readiness is documented and how quickly the property is protected.

For sellers, we look honestly at whether a defence exists or whether a negotiated exit is wiser. Where a decree has already been passed, we handle appeals and execution, and our page on civil first and second appeals explains the appellate route. Fees are discussed at the first meeting and agreed in writing, stage by stage. See also our guide on how long a civil suit takes in the Delhi High Court.

If a seller has backed out of your deal, or a buyer is pressing you to complete one, contact Advocate B.K. Singh for advice on your papers or for updates on the law.