Equity Will Not Permit Unjust Enrichment: Supreme Court Upholds Possession Warrants Against Litigant Who Refused ₹2 Crore Compensation
The Apex Court held that a party who has been granted extraordinary compensation instead of specific performance cannot obstruct execution by refusing payment and continuing to occupy the property.
Justice Vikram Nath, Justice Sandeep Mehta, Supreme Court
The Supreme Court dismissed an appeal filed against the orders of the Punjab and Haryana High Court, which had directed the issuance of warrants of possession against the appellant, who refused to vacate the property despite being awarded substantial monetary compensation.
The Court was hearing an appeal arising from execution proceedings initiated after a prior judgment of the Supreme Court directed payment of ₹2 crore to the appellant instead of specific performance of an agreement to sell executed in 1989.
A Bench comprising Justice Vikram Nath and Justice Sandeep Mehta, while dismissing the petition, observed that “equity will not allow unjust enrichment. The process of execution exists to give effect to judgments and not to underwrite windfalls. A party that has received such compensation must yield possession.”
Advocate Mayank Kshirsagar appeared for the appellant, while Advocate Priyanjali Singh represented the respondents.
Background
The dispute had originated from an agreement to sell executed in 1989, under which the respondents agreed to sell a property to the appellant for ₹14,50,000, of which ₹25,000 was paid as earnest money. The appellant had been given possession of the ground floor pursuant to the agreement.
When the sale was not completed, the appellant initially filed a suit for an injunction to restrain alienation of the property, which was later withdrawn. Subsequently, a suit for specific performance of the agreement was instituted and decreed by the Trial Court in 2009. The decree was affirmed by the First Appellate Court and the High Court.
However, upon appeal, the Supreme Court in April 2025 held that the suit for specific performance was barred under Order II Rule 2 of the Code of Civil Procedure, 1908, since the earlier injunction suit was based on the same cause of action. Nevertheless, the Apex Court had awarded ₹2 crore to the appellant in place of the original earnest money of ₹25,000 to balance equities.
When the respondents attempted to pay the compensation and sought possession, the appellant refused to accept the amount, prompting execution proceedings. The Executing Court directed the issuance of warrants of possession and ordered police assistance, which was later upheld by the High Court.
Court’s Observation
The Supreme Court, upon hearing the matter, found that the appellant had been “unnecessarily delaying and causing obstruction in the execution of the decree” despite the respondents’ compliance with the Court’s earlier order. The Court observed that the compensation of ₹2 crore was awarded to ensure closure of the decades-long dispute and to restore the property to its rightful owners, not to create a windfall for the appellant.
The Apex Court noted that the appellant had no independent right to remain in possession, as his earlier suit for an injunction based on possession had been dismissed in 1990. The Bench remarked that once the specific performance claim stood rejected and compensation was granted, the appellant “cannot enjoy the possession and at the same time receive the amount of Rupees Two Crores as against an advance amount of Rupees Twenty-Five Thousand only.”
While stating that it was not pointed out at the time of the hearing of the Civil Appeal that the appellant was continuing in possession otherwise “at that very stage this aspect would have been clarified and specific direction would have been issued that the amount of Rupees Two Crores was being paid by the respondents to the appellant not only in lieu of earnest money but also that the appellant would be required to hand over possession to the respondents.”
The Bench further invoked the equitable maxim “actus curiae neminem gravabit”, meaning that the act of the court shall prejudice no one, stating that “when an inadvertent omission is brought to the Court’s attention, it becomes the Court’s solemn duty to ensure that no party suffers on account of such mistake”. The Bench concluded that “in such circumstances, the Court is obliged to restore the party to the very position he would have occupied had the error not occurred.”
Furthermore, rejecting the argument that possession could be protected under Section 53-A of the Transfer of Property Act, 1882, the Court held that such protection could not survive after the dismissal of the suit for specific performance and the grant of monetary compensation.
Conclusion
Dismissing the appeal, the Supreme Court affirmed that the appellant’s continued occupation was wholly unjustified and contrary to equity.
The Court imposed costs of ₹10 lakh on the appellant to be paid to the respondents within four weeks, failing which the amount would carry 12% annual interest. Proof of payment was directed to be filed within six weeks, with the Registry to list the matter for appropriate orders if non-compliance was reported.
Cause Title: Prem Aggarwal v. Mohan Singh & Ors. (Neutral Citation: 2025 INSC 1214)
Appearances
Appellant: Advocates Mayank Kshirsagar, AOR, with Advocate Pavani Verma.
Respondents: Advocate Priyanjali Singh, AOR