The Bombay High Court has affirmed that in the absence of a written agreement, the parties' conduct - including silence in response to formal notices - can serve as critical evidence to establish the terms of a verbal contract for the sale of immovable property. This ruling reinforces the equitable doctrine of specific performance in cases where one party has substantially performed and the other has failed to rebut claims with credible evidence.
Background & Facts
The Dispute
The dispute arose from a verbal agreement between Major Fatesingh N. Thopte (deceased), the Plaintiff, and Dr. Indu Patwardhan (deceased), the Defendant, for the sale of Flat No.107 in the building "VIN’S SPA" at Boat Club Road, Pune. The parties, described as friends, entered into an oral contract in late 1989 without executing any registered agreement for sale.
Key Facts
- The Plaintiff claimed the flat was agreed to be sold at Rs.540 per sq.ft., totaling Rs.5,56,000.
- The Plaintiff paid Rs.4,00,000 in installments between 28 November 1989 and 6 July 1990, for which the Defendant issued receipts.
- Possession was to be delivered on or before 28 May 1991.
- The Defendant never obtained a completion certificate or executed a registered sale deed.
- The Defendant later claimed the agreed rate was Rs.650 per sq.ft., with additional costs borne by the Plaintiff.
- The Defendant did not produce any books of accounts, sale records, or contemporaneous documents to substantiate the Rs.650 per sq.ft. claim.
- A registered sale deed for Flat No.104 (Exh.125) dated 26 December 1990 at Rs.6,50,000 was produced by the Defendant, but the transaction occurred over a year after the Plaintiff’s agreement.
- The Plaintiff sent a letter on 23 November 1991 and a legal notice dated 7 January 1992, detailing the terms of the agreement and demanding performance.
- The Defendant did not respond to either communication until after the suit was filed on 16 February 1992.
Procedural History
- 28 November 1989: First payment made by Plaintiff towards purchase of flat.
- 6 July 1990: Final payment of Rs.4,00,000 made by Plaintiff.
- 28 May 1991: Deadline for delivery of possession expired.
- 23 November 1991: Plaintiff sent first letter demanding performance.
- 7 January 1992: Plaintiff issued legal notice (Exh.119).
- 16 February 1992: Defendant filed reply to notice - after suit was instituted.
- 1992: Special Civil Suit No.202 of 1992 filed by Plaintiff for specific performance.
- 4 July 2003: Civil Judge, Pune, decreed specific performance, holding Plaintiff ready and willing, and found agreement at Rs.540/sq.ft.
- 22 September 2025: District Judge, Pune, dismissed appeal (Regular Civil Appeal No.1053 of 2012), affirming trial court’s findings.
- 1 April 2026: Judgment reserved by Bombay High Court.
- 24 April 2026: Second Appeal No.155 of 2026 dismissed.
Relief Sought
The Appellants sought reversal of the decree of specific performance, arguing the trial court erred in accepting the Rs.540/sq.ft. rate and in disregarding the sale deed for Flat No.104. Alternatively, they requested the Court to enhance the balance consideration payable by the Plaintiff to account for 35 years of inflation and delay.
The Legal Issue
The central question was whether, in the absence of a written agreement, the failure of a party to respond to a formal notice detailing the terms of a verbal contract can be construed as acquiescence to those terms, and whether such silence, combined with partial performance and lack of contrary evidence, justifies a decree of specific performance.
Arguments Presented
For the Appellant
Dr. Abhinav Chandrachud argued that the Courts below erred in relying on the Defendant’s silence as evidence of admission. He cited Union of India v. Watkins Mayor and Co. and Rajkumar v. Debt Recovery Appellate Tribunal to assert that non-reply to a notice cannot amount to admission or waiver. He further contended that the registered sale deed for Flat No.104 (Exh.125), executed at Rs.650/sq.ft., carried presumptive validity under Jamila Begum v. Shami Mohd., and should have been accepted as evidence of prevailing market rates. He also argued that the Architect’s testimony (DW2) was improperly disregarded. Lastly, he urged the Court to exercise discretion under Ferrodous Estates v. P. Gopirathnam to enhance the balance consideration due to the 35-year delay.
For the Respondent
Mr. Prasad S. Dani, Sr. Advocate, countered that no substantial question of law arose. He emphasized that the Defendant’s defense was inconsistent - first claiming the payment was a deposit, then asserting a higher rate of Rs.650/sq.ft. only after the suit was filed. He argued that the sale deed for Flat No.104 was irrelevant due to the one-year gap and differing market conditions. He maintained that the Plaintiff’s consistent conduct, partial payment, and the Defendant’s prolonged silence established the terms of the verbal contract on a preponderance of probabilities.
The Court's Analysis
The Court acknowledged that verbal agreements for sale of immovable property are enforceable under Section 10 of the Indian Contract Act, 1872, provided they are proved by evidence. In the absence of a written document, the court must rely on the conduct of the parties, contemporaneous circumstances, and the principle of preponderance of probabilities.
"The failure to controvert the claim of the Plaintiff cannot be brushed aside lightly."
The Court distinguished Union of India v. Watkins Mayor and Co. and Rajkumar v. Debt Recovery Appellate Tribunal, noting that those cases involved claims of rent or debt where silence alone could not establish liability. In contrast, here, the silence occurred in response to a notice that precisely articulated the core term of the contract - the price. The Defendant had every opportunity to deny the rate but chose not to respond until after litigation commenced.
The Court further held that the sale deed for Flat No.104, executed a year later, could not be used to infer the price of a transaction in 1989. Real estate prices fluctuate, and differential pricing within the same project is common. The Defendant’s failure to produce any contemporaneous records, account books, or other sale deeds from 1989-1990 rendered the Rs.650/sq.ft. claim speculative.
The Court also rejected the argument that the Architect’s testimony was wrongly discarded, finding no material misreading of evidence. The trial court’s findings were based on a holistic appreciation of the evidence, including the Plaintiff’s payment history, the Defendant’s inaction, and the absence of any credible rebuttal.
Regarding the request to enhance the balance consideration, the Court noted that while Ferrodous Estates permits courts to adjust terms in equity, such discretion must be exercised cautiously. The Plaintiff had already paid Rs.4,00,000 - over 70% of the total consideration - 35 years ago. The Defendant retained both the property and the use of the funds. The Court found no inequity requiring adjustment, as the decree merely enforced the original agreed terms.
The Verdict
The Second Appeal was dismissed. The decree of specific performance dated 4 July 2003 was upheld. The Appellants were directed to execute a registered sale deed for Flat No.107 in favor of the Respondents within 8 weeks. The Respondents were to pay the balance consideration of Rs.1,56,000 upon execution of the deed. No enhanced consideration or interest was ordered. Costs of Rs.25,000 were awarded to the Respondents.
What This Means For Similar Cases
Silence Can Be a Powerful Indicator of Agreement
- Practitioners must treat unchallenged notices detailing contractual terms as significant evidence in verbal agreement cases.
- Failure to respond to a formal notice asserting key terms may be weighed heavily in favor of the claimant, especially where no contrary evidence is produced.
Documentary Evidence Must Be Contemporary and Relevant
- Post-event sale deeds or documents from different time periods cannot be used to rebut claims about earlier transactions without contextual justification.
- Parties must produce contemporaneous records (e.g., price lists, account books, other agreements from the same period) to substantiate alternative terms.
Specific Performance Is Not Barred by Delay Alone
- Delay of decades does not automatically defeat specific performance if one party has substantially performed and the other has benefited from the status quo.
- Courts may decline to adjust contract terms for inflation unless there is clear inequity caused by the delay, such as unjust enrichment or deprivation.
Burden of Proof Shifts to the Denying Party
- Once a claimant establishes a plausible verbal agreement with partial performance and consistent conduct, the burden shifts to the defendant to disprove it with credible evidence.
- Vague, inconsistent, or belated defenses will not suffice.
