In a significant ruling that clarifies the balance between contractual rights and equitable relief, the Supreme Court of India on February 13, 2025, partly allowed an appeal by M/s Tomorrowland Limited (formerly M S Shoes East Ltd.), ordering a refund of ₹28.11 crores from HUDCO (Housing and Urban Development Corporation Limited) while denying interest due to the appellant’s inequitable conduct.
The case revolved around a failed allotment of land in New Delhi meant for the construction of a 5-star hotel and a car park, highlighting critical issues of reciprocal obligations, forfeiture, and forum shopping in civil litigation.
Case Background
In 1994, HUDCO allotted land at Andrews Ganj, New Delhi, to Tomorrowland for a 5-star hotel project and an adjacent car park for a consideration of over ₹78 crores. The terms required HUDCO to first obtain approvals under the Urban Land (Ceiling and Regulation) Act, 1976 and the Income Tax Act before executing a sub-lease.
Tomorrowland paid the first installment of ₹28.11 crores but refused to pay the next two installments, citing HUDCO’s failure to fulfil its contractual obligations. Eventually, HUDCO cancelled the allotment and forfeited the paid amount.
Litigation History
– Tomorrowland initially filed a suit in the Delhi High Court, which was conditionally entertained upon payment of ₹15 crores, which the company failed to deposit.
– The company then withdrew that suit and filed a fresh one before a civil court, only seeking a declaration that the cancellation was illegal—avoiding the relief of possession to escape payment of ad valorem court fees.
– The trial court and first appellate court ruled in favor of Tomorrowland, but the Delhi High Court reversed these findings in 2016, stating the suit was defective under Section 34 of the Specific Relief Act, and that the appellant was guilty of forum shopping.
Supreme Court’s Ruling
The Supreme Court, in a detailed analysis, allowed the appeal in part, ruling as follows:
– HUDCO breached contractual obligations: Failed to secure approvals and to execute a sub-lease.
– Refund Ordered: Tomorrowland was entitled to a refund of ₹28,11,31,939.
– No Interest Granted: The Court found the appellant guilty of forum shopping and abusing the judicial process, disqualifying it from interest under Section 34 CPC.
Quote from the judgment: “Whosoever comes to the court claiming equity, must come with clean hands… A court of law cannot be the abettor of inequity.”
Key Legal Takeaways
1. Enforceability of Reciprocal Obligations
– Even in commercial transactions, a party in breach of preconditions cannot forfeit consideration paid.
2. Limited Relief Without Clean Hands
– Discretion under Section 34 CPC cannot be invoked by litigants who indulge in forum shopping or concealment.
3. Clarity on Specific Relief Act, Section 34
– Not claiming possession where it is an implied relief makes the declaratory suit non-maintainable.
4. Restitution Limited by Conduct
– Refunds can be ordered without interest where the claimant’s conduct is inequitable.
Conclusion
The Tomorrowland v. HUDCO verdict is a landmark for commercial and real estate litigations involving government bodies. It underscores that while contractual performance is critical, judicial discretion and clean litigation conduct are equally central to securing complete relief.
This case also serves as a warning: strategic litigation tactics like avoiding possession claims or shifting forums can backfire—even in seemingly strong cases.