In a recent judgment, the Supreme Court held the in a suit for specific performance, High Court erred in drawing an adverse inference against the buyer for not producing a passbook or bank accounts, as they were not called upon to produce such evidence. The Court restored the Trial Court's judgment, directing the buyer to pay an additional sum and the seller to execute the sale deed.

Facts:-
In a recent Supreme Court of India case, the Court examined the issue of a buyer's (Appellant) readiness and willingness to perform an agreement to sell property for a sale consideration of Rs. 12,74,000/- and Rs. 3 lakhs were paid as earnest money. The buyer had also deposited the balance sum Rs.9,74,000/- with the trial court. This was contested by the seller (Respondent). This dispute had previously been heard by the Trial Court, which ruled in favour of the buyer, only to be later overturned by the High Court. The High Court overturned the Trial Court's decision based on its interpretation that the buyer (Appellant) had not provided sufficient evidence to prove their readiness and willingness to perform the agreement to sell. The High Court specifically focused on the fact that the buyer had not produced a passbook or bank accounts as evidence of having sufficient funds to pay the balance sale consideration.

Both parties presented their arguments, with the seller's counsel maintaining that the buyer had not provided sufficient evidence to demonstrate their readiness and willingness to perform the agreement. They cited the cases of J.P. Builders v. A. Ramadas (2011) 1 SCC 429 and U.N. Krishnamurthy v. A.M. Krishnamurthy; 2022 SCC On Line SC 840 in support of their position.

The Appellant (buyer) contended that the High Court erred in its judgment when it reversed the Trial Court's decision. The buyer's main contention was that they had, in fact, demonstrated their readiness and willingness to perform the agreement, contrary to the High Court's findings.

The buyer referred to the legal notice they had issued to the seller, asking them to receive the balance amount and execute the sale deed. They also highlighted the suit for specific performance they filed, in which they explicitly stated their readiness and willingness to perform the agreement. Additionally, the buyer pointed out the testimonies of their witnesses, who confirmed the buyer's attempts to pay the balance sale consideration.

The buyer argued that the High Court's reliance on the lack of a passbook or bank accounts as evidence of having sufficient funds was misplaced and should not have been a basis for an adverse inference against them. They referred to the cases of Ramrati Kuer v. Dwarika Prasad Singh (1967) 1 SCR 153 and Indira Kaur Sheo Lal Kapoor (1988) 2 SCC 488 to support this argument, emphasizing that an adverse inference could not be drawn unless the buyer was called upon to produce such evidence by either the defendant or the Court.

The Supreme Court delved into the evidence and testimonies presented by both parties, scrutinizing the buyer's actions in issuing a legal notice to the seller, asking them to receive the balance amount and execute the sale deed. Additionally, the buyer had filed a suit for specific performance, explicitly stating their readiness and willingness to perform the agreement. The buyer's witnesses, who were attestors to the agreement to sell, also confirmed the buyer's attempts to pay the balance sale consideration.

Despite the evidence presented, the High Court had drawn an adverse inference against the buyer for not producing a passbook or bank accounts as evidence of having sufficient funds to complete the transaction. The Supreme Court, however, referred to the cases of Ramrati Kuer (supra) and Indira Kaur (supra), which established that no adverse inference could be drawn unless the buyer had been called upon to produce such evidence by either the defendant or the Court.

In both cases, it was held that an adverse inference could only be drawn if the party had been specifically asked to produce the relevant documents by the opposing party or if the Court had ordered them to do so. In the absence of such requests or orders, no adverse inference could be drawn against the buyer for not producing a passbook or bank account statements.

Based on this analysis, the Supreme Court concluded that the High Court had erred in reversing the Trial Court's findings and ultimately set aside the High Court's judgment. The Supreme Court restored the Trial Court's judgment and decree for specific performance of the agreement to sell. However, to ensure complete justice, the Court directed the buyer to pay an additional Rs. 10 lakhs over and above the amount Rs.9,74,000/- deposited by the buyer earlier, along with the accrued interest¹.

By - Chaitanyaa Bhandarkar