Section 24 of Specific Relief Act, 1963

Source: Bombay High Court

Why in News?

Justice Mehroz K. Pathan of the Bombay High Court, in Khandesh & Ors. v. Late Sau. Taisaheb Sunanda & Ors.(2026), held that Section 24 of the Specific Relief Act, 1963 does not operate as a bar against a plaintiff filing a fresh suit for refund of earnest money after the dismissal of a suit for specific performance. 

• The Court clarified that while Section 24 restricts claims for compensation for breach of contract in the aftermath of a dismissed specific performance suit, it leaves intact the plaintiff's right to pursue other reliefs — including refund of earnest money — that arise from the same underlying transaction.

What was the Background of Khandesh & Ors. v. Late Sau. Taisaheb Sunanda & Ors. (2026) Case? 

• The dispute arose between a cooperative society and a public charitable trust concerning a failed agreement for sale of immovable property. 
• The plaintiff deposited Rs. 2,00,000/- as earnest money pursuant to the agreement for the purchase of land. 
• The transaction failed to materialise due to disputes regarding title and objections raised by a third party named Babulal. 
• Following the breakdown of the transaction, the defendants forfeited the earnest money deposited by the plaintiffs. 
• The plaintiffs had issued a legal notice calling upon the defendants to furnish title documents; the defendants denied the request and failed to produce a clear title. 
• The defendants argued that since a prior suit for specific performance had not resulted in relief, any subsequent claim for refund was barred under law. 
• The second appeal was filed before the Bombay High Court challenging concurrent findings of the courts below, which had directed refund of the earnest money.

What were the Court's Observations? 

On the Bar Under Order II Rule 2: 

• The Court examined the earlier proceedings and held that the bar under Order II Rule 2 of the Code of Civil Procedure was not attracted, as the previous suit was for an injunction based on a different cause of action, whereas the present suit arose from the forfeiture of earnest money following the failure of the transaction — constituting a distinct cause of action. 

On Readiness and Willingness of Plaintiffs: 

• The Court noted that the plaintiffs were at all times ready and willing to perform their part of the contract. It was solely due to the objection raised by Babulal that the sale deed could not be executed, and the failure to produce a clear title lay with the defendants. 

On Section 22 of the Specific Relief Act: 

• The Court analysed Section 22 of the Specific Relief Act, 1963, which provides that a plaintiff instituting a suit for specific performance may also claim alternative reliefs, including refund of any earnest money or deposit paid under the contract. 

On Section 24 of the Specific Relief Act: 

• Interpreting Section 24, the Court held that the provision operates only to bar a plaintiff's claim for compensation for breach of contract after dismissal of a suit for specific performance. It does not bar claims for other forms of relief — such as refund of earnest money — to which the plaintiff may otherwise be entitled by reason of the same breach. 

On Relief: 

• The Court dismissed the second appeal, upheld the concurrent findings of the courts below, and confirmed the decree directing refund of the earnest money along with interest at 9% per annum.

What is Section 24 of the Specific Relief Act, 1963? 

Section 24: Bar on Suit for Compensation After Dismissal of Specific Performance Suit 

Section 24 operates on a simple two-part structure: 

• What it bars — Once a suit for specific performance of a contract (or any part of it) is dismissed, the plaintiff loses the right to file a fresh suit claiming compensation for breach of that same contract or part. 
• What it preserves — The dismissal does not bar the plaintiff from suing for any other relief to which they may be entitled by reason of the same breach — such as refund of earnest money, restitution, or other equitable remedies. 
• In essence: Section 24 prevents double-biting on the compensation front — a plaintiff cannot first litigate specific performance to finality and then turn around and claim damages for the same breach. However, it does not shut the door entirely; restitutionary or other non-compensatory reliefs remain available through a fresh suit.