The Supreme Court held that an agreement to sell containing a clause promising to refund the buyer's money if the deal falls through does not, by itself, stop the buyer from later suing for specific performance. A bench of Justice K.V. Viswanathan and Justice Alok Aradhe ruled that such a clause is not a bar to enforcing the agreement in court.
What this changes for a title check
Agreements to sell commonly include a refund clause covering earnest money if the seller backs out or the deal fails. Sellers sometimes argue that such a clause means the buyer's only remedy is a refund, not enforcement of the sale itself. This ruling rejects that reading, so a refund clause alone will not defeat a buyer's suit to force the sale through. For anyone reviewing an agreement to sell as part of a title check, this means a refund or earnest money clause should not be treated as closing off the possibility that a disappointed buyer could still be litigating for the property itself, not just money. If a title chain shows an old agreement to sell followed by a dispute, a lawyer should check the case status specifically for a live specific performance claim, since a refund clause in the agreement does not rule that out.