In a significant ruling, the Supreme Court of India allowed a civil appeal filed by Harish Kumar, reversing the Punjab and Haryana High Court’s judgment that had favored a specific performance claim made on the basis of an alleged sale agreement.
The case originated from Civil Suit No. 91-T/04, filed in 2000 by respondents Amar Nath and another, seeking specific performance of an agreement allegedly executed on 12 February 1999. The respondents claimed Harish Kumar had agreed to sell his house in Patiala for ₹70,000 and received ₹55,000 as part-payment, even transferring possession of the property. They also cited a rent agreement under which the appellant allegedly continued to stay as a tenant.
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However, Harish Kumar argued that there was no sale agreement. He claimed he had borrowed ₹50,000 at 2.25% monthly interest and that the respondents, who were moneylenders, had fraudulently taken his signatures on blank stamp papers, which were later misused to fabricate the agreement.
"There was no agreement to sell or purchase. The documents were created by misusing blank papers signed at the time of loan disbursement," the appellant stated.
Both the Trial Court and the First Appellate Court dismissed the suit, finding the plaintiff’s evidence insufficient and noting that the sale consideration was suspiciously low compared to the actual market value of ₹4.04 lakhs. They also found the conduct of the plaintiffs consistent with moneylending practices, such as taking signatures on blank papers.
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However, the High Court reversed this decision, holding that the defendant’s admitted signatures and handwritten note about the ₹55,000 payment on the agreement supported the validity of the document. It relied on the rent deed and receipts signed by Harish Kumar and rejected the defense that the papers were blank at the time of signing.
"The defendant’s own handwriting acknowledging the payment casts serious doubt on his denial of the agreement," the High Court had reasoned.
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The Supreme Court, however, disagreed. It found that the respondents failed to examine any witnesses to the alleged agreement or rent deed. The evidence was self-serving and unsupported by external validation. The apex court cited legal precedent, noting that for specific performance, the existence of a valid agreement must be clearly proven.
"Even if readiness to perform is shown, the basic requirement of proving a valid agreement was not met," the Court held.
The Supreme Court allowed the appeal, set aside the High Court’s order, and dismissed the claim for specific performance. Still, it acknowledged the loan transaction and directed the appellant to repay ₹3,00,000 within four weeks to settle the debt.
Case Title: Harish Kumar vs. Amar Nath and Another
Case Number: Civil Appeal No. 308 of 2015