The High Court of Madhya Pradesh has set aside the trial court's dismissal of a suit for specific performance of an agreement to sell immovable property, holding that the agreement was genuine despite denial by defendants and that their subsequent sham sale was a fraudulent attempt to defeat the plaintiff's rights. The Court emphasized the trial court's failure to compare signatures on the disputed agreement with admitted documents executed on the same date and criticized reliance on a handwriting expert's report that compared signatures with documents executed after litigation began.
Background & Facts
The Genesis
The plaintiff, Surendra Yadav, filed a suit for specific performance of an agreement to sell dated 28.03.2015 in respect of House No.2 at Sector B, Indrapuri, Bhopal, owned by three siblings: Atul Sehgal, Benu Kshetrapal, and Monica Chouda. The agreement was for a total consideration of Rs.1,32,00,000, with an advance of Rs.5,00,000 paid in cash. The balance was to be paid upon execution of the sale deed within one month.
Key Facts
- The plaintiff paid Rs.5,00,000 as advance on 28.03.2015 and executed a sale deed for his 16.66% share with Monica Chouda on 27.04.2015 (Exhibit P-2).
- The plaintiff issued post-dated cheques to Monica Chouda, which were duly honoured.
- On 28.03.2015, the defendants executed a sale deed for their combined 83.34% share in favor of each other for Rs.50,00,000, which was less than half the guideline/circle rate of Rs.1.19 crores.
- The defendants denied the agreement and pleaded forgery, claiming their signatures were forged.
- The trial court dismissed the suit on grounds including lack of financial capacity of the plaintiff, absence of the agreement in the notary register, and suspicious circumstances surrounding the agreement.
Procedural History
- 04.06.2015: Suit for specific performance filed before the IIIrd District Judge, Bhopal (RCSA No.515/2015).
- 31.12.2021: Trial court dismissed the suit, holding the agreement was forged and the plaintiff lacked readiness and willingness.
- 15.07.2026: Appeal reserved by the High Court.
- 23.07.2026: Judgment pronounced allowing the appeal.
The Parties' Positions
Plaintiff's Case
The plaintiff argued that the agreement was genuine, evidenced by the sale deed executed by Monica Chouda in his favor. He contended that the trial court erred in dismissing the suit due to:
- Failure to compare signatures on the disputed agreement (Exhibit P-1) with admitted documents executed on the same date (Exhibit D-8).
- Over-reliance on a handwriting expert's report that compared signatures with documents executed after litigation began.
- Ignoring the plaintiff's financial capacity, as the post-dated cheques issued to Monica Chouda were honoured.
- The defendants' conduct in executing a sham sale deed for Rs.50,00,000, which was less than half the guideline rate, to defeat the plaintiff's rights.
Defendants' Case
The defendants denied the agreement, pleaded forgery, and argued that the plaintiff lacked readiness and willingness. They contended that the agreement was forged and that the plaintiff's financial capacity was doubtful due to the issuance of post-dated cheques. They also relied on the absence of the agreement in the notary register and other suspicious circumstances.
Relief Sought
The plaintiff sought specific performance of the agreement to sell, directing the defendants to execute a sale deed for their 83.34% share within 60 days, failing which the plaintiff would be at liberty to get the decree executed as per law.
The Legal Issue
The central question was whether the trial court erred in dismissing the suit for specific performance on grounds of forgery, lack of readiness and willingness, and suspicious circumstances, despite the plaintiff proving the existence of the agreement and the defendants' subsequent sham transaction to defeat his rights.
Arguments Presented
For the Appellant/Petitioner
The plaintiff argued that the trial court failed to exercise proper jurisdiction by:
- Not comparing the signatures on the disputed agreement (Exhibit P-1) with admitted documents executed on the same date (Exhibit D-8).
- Relying on a handwriting expert's report that compared signatures with documents executed after litigation began, which the Supreme Court in Chennadi Jalapathi Reddy v. Baddam Pratapa Reddy held as unreliable.
- Ignoring the plaintiff's financial capacity, as the post-dated cheques issued to Monica Chouda were honoured, and the plaintiff's readiness and willingness was evident from filing the suit within five weeks of the agreed date for execution of the sale deed.
- The defendants' conduct in executing a sham sale deed for Rs.50,00,000, which was less than half the guideline rate, to defeat the plaintiff's rights.
For the Respondent/State
The defendants argued that the trial court correctly dismissed the suit, as:
- The agreement was forged, and the defendants' signatures were forged.
- The plaintiff lacked financial capacity, as evidenced by the issuance of post-dated cheques.
- The absence of the agreement in the notary register and other suspicious circumstances surrounding the agreement.
- The plaintiff's readiness and willingness was doubtful, as he did not purchase stamp papers for the defendants' share.
The Court's Analysis
The High Court meticulously examined the evidence and the trial court's reasoning, emphasizing the following principles:
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Burden of Proof for Forgery: The Court reiterated that when forgery is pleaded, the burden lies on the party alleging it to prove it. The trial court erred in shifting the burden to the plaintiff to disprove forgery.
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Comparison of Signatures: The Court held that the trial court failed to exercise its power under Section 73 of the Indian Evidence Act, 1872 to compare the disputed signatures with admitted signatures. The Court itself compared the signatures on the disputed agreement (Exhibit P-1) with the admitted sale deed (Exhibit D-8) executed on the same date and found them to be matching. The Court criticized the handwriting expert's report for comparing signatures with documents executed after litigation began, relying on Chennadi Jalapathi Reddy v. Baddam Pratapa Reddy and S. Gopal Reddy v. State of A.P. to hold that such reports are unreliable without substantial independent corroboration.
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Financial Capacity and Readiness and Willingness: The Court held that the plaintiff's financial capacity cannot be doubted solely because he issued post-dated cheques to Monica Chouda, which were honoured. The Court relied on Sukhbir Singh v. Brij Pal Singh and Syed Dastagir v. T.R. Gopalakrishna Setty to hold that a purchaser is not required to jingle coins to prove financial readiness, provided he can show the capacity to arrange funds. The Court also held that the plaintiff's readiness and willingness was evident from filing the suit within five weeks of the agreed date for execution of the sale deed.
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Sham Transaction: The Court held that the defendants' sale deed for Rs.50,00,000, which was less than half the guideline rate, was a sham transaction executed to defeat the plaintiff's rights. The Court noted the defendants' conduct in the criminal case relating to the murder of their father, where Benu Kshetrapal initially implicated Atul Sehgal but later changed her statement to secure his acquittal after the sham transaction.
"The sale deed Exhibit D-25 executed by defendant No.1 in favour of defendant No.2 as already noted above, is only a sham transaction just to frustrate the agreement in question and to manipulate and leverage defendant No.1 in executing sale date in favour of defendant No.2 at less than half the guidelines/circle rates."
- Suspicious Circumstances: The Court rejected the trial court's hyper-technical approach in considering suspicious circumstances, such as the absence of the agreement in the notary register, the number of pages in the agreement, and the plaintiff's knowledge of Monica Chouda's stay duration in India. The Court held that these were not sufficient to doubt the genuineness of the agreement.
The Verdict
The High Court allowed the appeal, set aside the trial court's judgment and decree dated 31.12.2021, and decreed the plaintiff's suit for specific performance. The Court directed the defendants to execute a sale deed for their 83.34% share in favor of the plaintiff within 60 days from the date of the judgment, failing which the plaintiff would be at liberty to get the decree executed as per law. The Court also awarded costs to the plaintiff.
What This Means For Similar Cases
Documentary Evidence Trumps Expert Opinion Without Corroboration
- Handwriting expert reports are weak evidence and must be corroborated by substantial independent evidence.
- Courts must exercise their power under Section 73 of the Evidence Act to compare disputed signatures with admitted signatures, especially when documents are executed on the same date.
- Comparison with documents executed after litigation begins is inherently unreliable and must be discarded.
Sham Transactions to Defeat Rights Are Void
- Transactions executed at undervalue to defeat a plaintiff's rights are sham transactions and will be set aside.
- Courts must examine the surrounding circumstances, including the relationship between parties and the timing of transactions, to determine their genuineness.
Financial Capacity Cannot Be Doubted Solely Due to Post-Dated Cheques
- Post-dated cheques issued and honoured do not negate financial capacity.
- Courts must consider the entire financial arrangement between parties and not hyper-technically scrutinize the mode of payment.
Readiness and Willingness Is Evident from Timely Filing of Suit
- Filing a suit within weeks of the agreed date for execution of the sale deed is strong evidence of readiness and willingness.
- Courts must not overlook the plaintiff's conduct in pursuing the suit diligently.
Notary Registers Are Not the Sole Determinant of Genuineness
- The absence of an entry in the notary register does not invalidate an agreement, as parties cannot control the notary's record-keeping.
- Courts must focus on the genuineness of the agreement and the conduct of parties, not hyper-technical defects in its execution.
