Sangita Sinha v. Bhawana Bhardwaj & Ors.

R. Kandasamy (Since Dead) & Ors. v. T.R.K. Sarawathy & Anr., Civil Appeal No. 3015 of 2013 decided on 21st November 2024; Mehboob-Ur-Rehman (Dead) through Legal Representatives v. Ahsanul Ghani [2019] 2 SCR 169 : (2019) 19 SCC 415; C.S. Venkatesh v. A.S.C. Murthy (Dead) by Legal Representatives and Ors. [2020] 2 SCR 676 : (2020) 3 SCC 280; Kamal Kumar v. Premlata Joshi and Ors. [2019] 1 SCR 54 : (2019) 3 SCC 704; P. Daivasigamani v. S. Sambandan [2022] 18 SCR 199 : (2022) 14 SCC 793; Gomathinayagam Pillai and Ors. v. Palaniswami Nadar [1967] 1 SCR 227; Vijay Kumar and Others v. Om Parkash, 2018 SCC OnLine SC 1913; J.P. Builders and Another v. A. Ramadas Rao and Another [2010] 15 SCR 538 : (2011) 1 SCC 429; Umabai and Another v. Nilkanth Dhondiba Chavan (Dead) By LRs. and Another [2005] 3 SCR 521 : (2005) 6 SCC 243; I.S. Sikandar (Dead) By LRs. v. K. Subramani and Others [2013] 17 SCR 24 : (2013) 15 SCC 27; A. Kanthamani v.

Nasreen Ahmed [2017] 2 SCR 610 : (2017) 4 SCC 654; Shrisht Dhawan (Smt) v. Shaw Bros. [1991] Supp. 3 SCR 446 : (1992) 1 SCC 534; Citadel Fine Pharmaceuticals v. Ramaniyam Real Estates Private Limited and Another [2011] 13 SCR 605 : (2011) 9 SCC 147 – referred to. Specific Performance Act, 1963 List of Acts List of Keywords Specific relief; Agreement to sell; Equitable and discretionary relief of specific performance; Readiness and Willingness’ to perform contract; Cancellation of agreement; Encashing demand drafts; Acceptance by buyer of refund of consideration; Necessary and interested party; Suppression of material facts; Suit for specific performance of an agreement to sell; Refund of the majority of the earnest money deposit/advance consideration during the pendency of the suit; Locus to file. Case Arising From CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4972 of 2025 From the Judgment and Order dated 09.05.2024 of the High Court of Judicature at Patna in F.A. No.

83 of 2018 Sangita Sinha v. Bhawana Bhardwaj and Ors. 554 [2025] 4 S.C.R. Appearances for Parties Advs. for the Appellant: S. B. Upadhyay, Sr. Adv., Ms. Indu Kaul, Rajiv Kumar Sinha, Raj Kumar, Abhinav Kathuria. Advs. for the Respondents: Mungeshwar Sahoo, Ardhendumauli Kumar Prasad Sr. Advs., Samrandra Kumar, Vivek Kumar Srivastva, Pawan Kumar, Ravi Bhushan Upadhyay, Ramesh Kumar Mishra, Shivam Tiwary, Vishal Arun Mishra, Ramesh Kumar Mishra, Shivam Tiwary, Ms. Anusha Rathore, Shivank S. Singh. Judgment / Order of the Supreme Court Judgment Manmohan, J

Leave granted.

The primary issue that arises for consideration in the present civil appeal is whether a suit for specific performance of an Agreement to Sell is liable to be decreed if the buyer had accepted the refund of majority of the earnest money deposit/advance consideration, during the pendency of the civil suit?

Brief facts leading to the present appeal are as under:-

3.1. Late Kushum Kumari (“original defendant” / “seller”) was allotted the subject property by the People’s Cooperative House Construction Society Limited (“Society”) vide a registered sub- lease dated 2nd April 1968.

3.2. On 25th January 2008, an unregistered Agreement to Sell with respect to the subject property was executed between the “Respondent No.1-buyer”-plaintiff and the seller for a total sale consideration of Rs. 25,00,000/- (Rupees Twenty Five Lakhs). At the time of the execution of the Agreement to Sell, the Respondent No.1-buyer paid a sum of Rs.2,51,000/- (Rupees Two Lakh Fifty One Thousand) in cash to the seller and issued three post-dated cheques worth Rs.7,50,000/- (Rupees Seven Lakh Fifty Thousand). Digital Supreme Court Reports [2025] 4 S.C.R. 555

3.3. It is the case of Respondent No.1-buyer that when she visited the subject property along with her husband on 11th February 2008, the tenants of the seller created a scuffle and forced them to return. In the circumstance, the Respondent No.1- buyer issued legal notices dated 23rd February 2008 and 23rd April 2008, expressing her intention to pay the balance sale consideration and to get the property registered in her favour.

3.

Upon the failure of the seller to execute the sale deed, Respondent No.1-buyer filed a suit before the Trial Court, Sub Judge-IV, Patna under the Specific Performance Act, 1963 (“Act, 1963)” seeking specific performance of the Agreement to Sell dated 25th January 2008 and the same was registered as Title Suit No. TS/176/2008 (“subject suit”).

3.

The subject suit was contested by the seller by filing a written statement, stating therein that she came to know about the Agreement to Sell dated 25th January 2008 on 5th February 2008 and immediately thereafter, made a complaint dated 6th February 2008 with the Inspector of Police-cum-Station House Officer, Kankarbagh Police Station, Patna stating that her signatures had been fraudulently taken on the Agreement to Sell dated 25th January 2008. It was further stated that the seller issued a letter dated 7th January 2008 cancelling the Agreement to Sell dated 25th January 2008 and refunded Rs.2,11,000/- (Rupees Two Lakh Eleven Thousand) through five demand drafts dated 7th February 2008 in lieu of the cash and returned two of the three post-dated cheques of Rs.2,50,000/- (Rupees Two Lakh Fifty Thousand) each, which were issued by the seller. Vide Order dated 16th December 2008, issues were framed by the Trial Court.

3.

Upon the demise of the seller, the Respondent No.3 herein, who is the step grandson of the seller, was impleaded as substituted defendant no. 1 and the appellant herein was impleaded as defendant no. 3 as the subject property had been bequeathed in her favour by way of a Will dated 23rd September 2002 executed by the original owner/seller.

3.

After consideration of the depositions of PW-1 (Respondent No.1 herein) and her husband, PW-2, the Trial Court framed three additional issues vide order dated 21st January 2013. Sangita Sinha v. Bhawana Bhardwaj and Ors. 556 [2025] 4 S.C.R. The issues were framed once again on 27th April 2018, and a judgment was passed in favour of Respondent No.1-buyer on the same date.

3.

The judgment dated 27th April 2018 and the decree dated 10th May 2018 were challenged by the appellant herein in First Appeal No. 83 of 2018. The said appeal was dismissed by the Patna High Court vide the impugned Judgment dated 9th May 2024.

3.

Upon the present Special Leave Petition being filed, this Court, while issuing notice, had directed parties to maintain status quo with respect to the possession on 20th August 2024. SUBMISSIONS ON BEHALF OF THE APPELLANT

4. Shri S.B. Upadhyay, learned senior counsel for the appellant, stated that the signatures of the seller on the Agreement to Sell dated 25th January 2008 had been fraudulently obtained by Respondent No.3 herein. He stated that the seller-defendant signed some blank papers believing the same to be related to the Will that she had executed in favour of the appellant on 23rd September 2002.

5. He stated that upon the discovery of the Agreement to Sell dated 25th January 2008 on 5th February 2008, the seller made a criminal complaint dated 6th February 2008 with the Inspector of Police- cum-Station House Officer, Kankarbagh, Patna that her signatures had been fraudulently obtained on the Agreement to Sell dated 25th January 2008.

6. He stated that on 7th February 2008, the seller wrote a letter to Respondent No.1-buyer cancelling the Agreement to Sell dated 25th January 2008 enclosing therewith five demand drafts dated 7th February 2008 amounting to Rs. 2,11,000/- (Rupees Two Lakh Eleven Thousand) in lieu of the cash and two of the three post-dated cheques of Rs.2,50,000/- (Rupees Two Lakh Fifty Thousand) each, which were issued by the Respondent No.1-buyer.

7. He pointed out that the Respondent No.1-buyer as well as her husband-PW2, in their depositions, have admitted that they had received five demand drafts dated 7th February 2008 amounting to Rs. 2,11,000/-(Rupees Two Lakh Eleven Thousand) in lieu of the cash and also received two of the three post-dated cheques of Rs.2,50,000/- (Rupees Two Lakh Fifty Thousand) along with the letter Digital Supreme Court Reports [2025] 4 S.C.R. 557 cancelling the Agreement to Sell dated 25th January 2008 in March 2008. He explained that five demand drafts dated 7th February 2008 of Rs.2,11,000/- (Rupees Two Lakh Eleven Thousand) were encashed by the Respondent No.1-buyer in July 2008, after institution of the subject suit on 5th May 2008. He submitted that the encashment of the demand drafts amounted to revocation of the Agreement to Sell dated 25th January 2008. He contended that the subject suit was filed by the Respondent No.1-buyer after revocation of the Agreement to Sell dated 25th January 2008, without seeking any relief against the revocation and without disclosing that she was in receipt of the demand drafts and post-dated cheques.

8. He contended that the subject suit was filed on the basis of an Agreement to Sell which stood cancelled and as such, the same was not maintainable. He submitted that existence of a valid agreement is sine qua non for grant of relief of specific performance. He pointed out that, in similar circumstances, this Court in R. Kandasamy (Since Dead) & Ors. vs. T.R.K. Sarawathy & Anr. (Civil Appeal No. 3015 of 2013 decided on 21st November 2024), had set aside the judgment and decree passed in favour of the Respondent No.1- buyer inter alia on the ground that a non-existent Agreement to Sell cannot be enforced by a Court of law.

9. Even otherwise, he contended that the Respondent No.1-buyer was not ready and willing to perform the Agreement to Sell dated 25th January 2008. He stated that a mere averment that the Respondent No.1-buyer is ready and willing to perform the contract will not suffice as readiness and willingness must be inferred in overall circumstances of the case, including the conduct of the Respondent No.1-buyer prior and subsequent to the filing of the suit.

He pointed out that the Respondent No.1-buyer in her cross- examination, had admitted that at the time of execution of the agreement, she was not aware of the balance in her bank account and at the time when the three post-dated cheques for Rs.2,50,000/- (Rupees Two Lakh Fifty Thousand) were issued, there was no sufficient balance in her account. He contended that the conduct of the Respondent No.1-buyer in encashing the demand drafts proved that she was not ready or willing to perform the contract. In support of his contentions, he relied upon the judgments of this Court in Mehboob-Ur-Rehman (Dead) through Legal Representatives Sangita Sinha v. Bhawana Bhardwaj and Ors. 558 [2025] 4 S.C.R.