Synopsis

The buyer paid ₹62 lakhs for a villa under an agreement to sell. after the developer cancelled the allotment alleging non‑payment of instalments, the parties entered into a settlement under which the buyer accepted a refund of only ₹44 lakhs and executed an indemnity bond. the buyer later sued for the balance ₹18 lakhs, claiming the settlement was signed under coercion. the trial court decreed the suit, holding the cancellation illegal and the settlement non‑binding. the high court dismissed the developer’s appeal, affirming that (i) instalments were construction‑linked, not time‑linked; (ii) demand notices were not proved to be served; (iii) the developer, being in a dominant position, coerced the buyer into accepting a lesser amount; and (iv) under section 74, forfeiture of earnest money without proof of loss is impermissible.

Court: High Court of Delhi at New Delhi

Coram: Hon’ble Ms. Justice Neena Bansal Krishna (Single Judge)

Date of Judgment: 18th May 2026

Citation: RFA 37/2020 (2026:DHC:4422)

Core Law: Indian Contract Act, 1872 – Sections 14, 16 (free consent, undue influence), 73 (damages), 74 (forfeiture of earnest money); Specific Relief Act, 1963 – Section 20.

1. Heading of the judgment

High court of delhi at new delhi

Rfa 37/2020, cm appl. 67118/2025 & cm appl. 9723/2026

M/s r. c. sood & co. developers pvt. ltd. (appellant) vs. Sharad maheshwari & anr. (respondents)

Coram: hon’ble ms. justice neena bansal krishna

Reserved on: 12th february, 2026; pronounced on: 18th may, 2026

2. Legal framework

Major laws and provisions involved:

• Indian contract act, 1872 – section 14 (free consent), section 16 (undue influence), section 73 (compensation for loss), section 74 (liquidated damages and forfeiture of earnest money)

• Specific relief act, 1963 – section 20 (discretion to grant specific performance)

• Code of civil procedure, 1908 – order xli (appeal

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