Restoration of equity and prevention of unjust enrichment in specific performance

It is a settled principle that equity must operate in a manner that prevents unjust enrichment and restores the parties to their original position, as far as possible particularly where both the parties are at fault. In a suit for specific performance concerning an agreement to sell, where both the buyer and the seller fail to fulfill their respective contractual obligations within the stipulated timelines, directing total forfeiture of earnest money by one party would result in an equitable windfall to the other party. The court must evaluate the mutual defaults, the passage of time, and the financial transactions that transpired between the parties during the subsistence of the agreement. When specific performance is denied due to lack of readiness or equitable considerations, the judicial forum has a duty to balance the equities by ensuring that neither party reaps an unearned penalty or suffers an uncompensated loss. Restitutionary directions must be structured to prevent undue enrichment while bringing an equitable resolution to long-standing property disputes. (Subhash Aggarwal v. Mahender Pal Chhabra & Anr. | 2026 INSC 11)