The Supreme Court has set aside concurrent orders granting specific performance in a property dispute, holding that the plaintiff failed to establish a concluded oral agreement for sale. The Court also held that the second suit was barred under Order II Rule 2 of the Code of Civil Procedure (CPC) because the plaintiff had omitted the relief of specific performance from an earlier suit.
Background
The dispute concerned an alleged oral agreement for the sale of property. According to the plaintiff, negotiations took place through a series of meetings and the consideration was eventually increased to Rs.20.50 crore. The plaintiff claimed that Rs.5.11 lakh was paid in cash and a cheque of Rs.5 crore was handed over as advance.
An earlier suit had been filed seeking only a permanent injunction against alienation or alteration of the property. Although that suit was later withdrawn, the plaintiff did not obtain leave when instituting the first suit to subsequently pursue the relief of specific performance.
The bench comprising Justice J. B. Pardiwala and Justice K. Vinod Chandran therefore examined both the maintainability of the second suit and whether the alleged oral agreement had actually been concluded.
The Court reiterated that an oral agreement can legally form the basis of a suit for specific performance. However, the person relying on such an agreement carries a heavy burden to establish that the essential terms were actually concluded between the parties.
"However, in a case where the plaintiffs come forward to seek a decree for specific performance of contract of sale of immovable property on the basis of an oral agreement alone, heavy burden lies on the plaintiffs to prove that there was consensus ad idem between the parties for a concluded oral agreement for sale of immovable property."
The Court found several inconsistencies in the pleadings concerning the meetings, the manner in which the agreement was allegedly concluded and the circumstances surrounding the payments. It also noted that the Rs.5 crore cheque said to have been given as advance was never presented for encashment.
The Court further held that testimony regarding the alleged agreement was insufficient. One witness did not have direct knowledge, while another's evidence concerning the authority of the person negotiating on behalf of the company was not supported by the pleadings or documents.
On maintainability, the Supreme Court held that the relief of specific performance was already available when the first suit was instituted. Since the plaintiff neither claimed that relief nor obtained the required leave, the subsequent suit attracted the bar under Order II Rule 2 CPC.
The Court also concluded that the alleged oral contract had not been proved. It therefore allowed the appeal, set aside the orders of the Trial Court and High Court, and dismissed the suit for specific performance.
The parties were directed to bear their respective costs.
Case Details
- Case Title: Bombay Garage Ahmedabad Limited & Ors. v. J P Iscon Private Ltd. & Anr.
- Case Number: Civil Appeal arising out of SLP (C) No. 25909 of 2024
- Judges: Justice J. B. Pardiwala and Justice K. Vinod Chandran
- Decision Date: September 29, 2026
