The Bombay High Court has affirmed that in the absence of a written agreement, the conduct of parties - particularly the failure to dispute key contractual terms after formal notice - can substantiate a claim for specific performance under the Indian Contract Act. This ruling reinforces the evidentiary weight of contemporaneous silence in property transactions, offering critical guidance for practitioners handling unregistered verbal agreements.
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 plaintiff alleged that the defendant agreed to sell the flat at Rs.540 per sq.ft., totaling Rs.5,56,000. The plaintiff paid Rs.4,00,000 between 28 November 1989 and 6 July 1990, and the defendant issued receipts. Possession was to be delivered by 28 May 1991. No registered agreement for sale was executed.
Key Facts
- The verbal agreement was made in late 1989.
- The plaintiff paid Rs.4,00,000 in installments between 28.11.1989 and 06.07.1990.
- The defendant issued receipts for the payments.
- The defendant failed to deliver possession by 28.05.1991.
- The plaintiff sent a letter on 23.11.1991 demanding performance.
- A legal notice dated 27.12.1991 (Exh.119) was issued, specifying the terms of the agreement and demanding execution of the sale deed.
- The defendant did not respond to either communication until after the suit was filed on 18.02.1992.
- The defendant’s reply, dated 16.02.1992, was filed only after the suit was instituted.
- The defendant later claimed the agreed rate was Rs.650 per sq.ft., and that the plaintiff had defaulted on payment within three months of November 1989.
- The defendant produced a registered sale deed dated 26.12.1990 for Flat No.104 at Rs.6,50,000 (Rs.650/sq.ft.) to support the higher rate claim.
- No other sale deeds, books of accounts, or contemporaneous pricing records from 1989 - 1990 were produced.
Procedural History
- 28.11.1989: First payment made under verbal agreement.
- 06.07.1990: Final payment of Rs.4,00,000 completed.
- 28.05.1991: Deadline for possession passed without delivery.
- 23.11.1991: Plaintiff’s first letter demanding performance.
- 27.12.1991: Legal notice issued.
- 18.02.1992: Suit filed for specific performance (Special Civil Suit No.202 of 1992).
- 16.02.1992: Defendant’s reply to notice filed after suit initiation.
- 04.07.2003: Civil Judge, Pune, decreed specific performance.
- 22.09.2025: District Judge, Pune, dismissed appeal (Regular Civil Appeal No.1053 of 2012).
- 24.04.2026: Bombay High Court delivered judgment on Second Appeal No.155 of 2026.
The Parties' Positions
Plaintiff’s Position: The verbal agreement was clear: Rs.540 per sq.ft. for the flat. The plaintiff paid Rs.4,00,000 and was ready and willing to pay the balance. The defendant’s silence after notice constituted acquiescence to the terms.
Defendant’s Position: The agreed rate was Rs.650 per sq.ft. The plaintiff defaulted by failing to pay the balance within three months of November 1989. The Rs.4,00,000 was a deposit, not full consideration. The sale deed for Flat No.104 proved prevailing market rates.
Relief Sought
The plaintiff sought specific performance of the contract, requiring the defendant to execute a registered sale deed and deliver possession. The defendant sought dismissal of the suit on grounds of non-performance, inconsistent terms, and limitation.
The Legal Issue
Can the failure of a party to respond to a formal notice detailing the terms of a verbal contract be construed as acquiescence to those terms, thereby supporting a decree of specific performance in the absence of documentary evidence?
Arguments Presented
For the Appellant
Counsel for the appellants argued that the courts below erred in treating silence as admission. Reliance was placed on Union of India v. Watkins Mayor and Co. and Rajkumar v. Debt Recovery Appellate Tribunal, where courts held that non-reply to a notice does not constitute admission or waiver. The sale deed for Flat No.104, executed at Rs.650 per sq.ft., was a contemporaneous document that should have been given presumptive value under Section 49 of the Indian Evidence Act. The courts below improperly discarded the testimony of DW2, the architect, and failed to consider the market context of 1989 - 1990. The delay of over 35 years warranted an enhancement of the balance consideration under Ferrodous Estates Pvt. Ltd. v. P. Gopirathnam.
For the Respondent
Counsel for the respondents contended that the appellants’ defences were inconsistent and fabricated. The claim that the Rs.4,00,000 was a deposit was raised only after the suit was filed, contradicting the initial defence of higher rate. No documents supported the Rs.650/sq.ft. claim for the suit flat. The sale deed for Flat No.104 was dated December 1990, over a year after the agreement with the plaintiff, and could not be used to infer terms of an earlier transaction. The silence after notice was not mere non-response but a failure to dispute the plaintiff’s version of the most critical term - the price - despite having ample opportunity.
The Court's Analysis
The Court undertook a meticulous review of the evidentiary landscape, emphasizing that in the absence of a written contract, the conduct of parties becomes the primary indicator of intent. The Court acknowledged the precedents cited by the appellants but distinguished them on factual grounds. In Watkins Mayor and Co., the issue was rent liability; in Rajkumar, it was debt recovery. Neither involved a claim for specific performance of a property sale where the price was the central, unchallenged term.
"The failure to controvert the claim of the Plaintiff cannot be brushed aside lightly, especially when the only bone of contention was the rate at which the consideration was agreed to be paid."
The Court held that the defendant’s silence after two formal communications - first a letter, then a legal notice - was not passive but significant. The notice explicitly stated the agreed rate as Rs.540 per sq.ft. and the total consideration as Rs.5,56,000. The defendant had over three months to respond before the suit was filed. The absence of any rebuttal, particularly on the most material term, rendered the plaintiff’s version more probable.
The Court further rejected the reliance on the sale deed for Flat No.104. The transaction occurred in December 1990, nearly a year after the plaintiff’s agreement in November 1989. Real estate pricing varies significantly even within the same project over time due to construction progress, demand, and buyer-specific negotiations. The defendant failed to produce any other sale deeds from 1989 - 1990 to establish a consistent pricing pattern.
The Court also noted the defendant’s shifting defences: first, that the payment was a deposit; later, that the rate was Rs.650 per sq.ft. This inconsistency undermined credibility. The Court affirmed the trial court’s finding that the plaintiff was ready and willing to perform, having paid over 70% of the consideration.
Regarding the request for enhanced consideration due to 35 years of delay, the Court declined. While Ferrodous Estates permits such discretion, the Court found no equity in favor of enhancement. The defendant had retained both the property and the use of Rs.4,00,000 for over three decades. The plaintiff, having paid a substantial sum, was entitled to the performance originally promised, not a windfall adjustment.
The Verdict
The Second Appeal was dismissed. The decree of specific performance dated 04.07.2003 was upheld. The respondents are entitled to a registered sale deed for Flat No.107 at the original consideration of Rs.5,56,000, with the balance of Rs.1,56,000 payable upon execution. The appellants shall execute the sale deed within 12 weeks from the date of this judgment. Costs of Rs.50,000 are awarded to the respondents.
What This Means For Similar Cases
Silence After Notice Can Be Deemed Acquiescence in Verbal Contracts
- Practitioners must treat formal notices in verbal property transactions as critical evidentiary tools.
- Failure to respond to a notice detailing key terms - especially price - can be used to establish the plaintiff’s version under the doctrine of preponderance of probabilities.
- This principle applies even where no written agreement exists, provided the notice is clear, specific, and unchallenged.
Market Comparables Must Be Contemporaneous to Be Probative
- Sale deeds from different time periods cannot be used to infer terms of an earlier verbal agreement unless a consistent pricing pattern is established.
- Real estate developers must maintain contemporaneous records of pricing for all units sold in a project to rebut claims of inconsistent terms.
- Courts will not infer uniform pricing across a project absent documentary proof of contemporaneous transactions.
Delay Does Not Automatically Entitle Defendant to Enhanced Consideration
- Courts may refuse to adjust contract terms due to inflation or time lapse if the defendant has benefited from the plaintiff’s payment and retained the property.
- The equitable principle of specific performance favors enforcing the original bargain unless the plaintiff’s conduct justifies modification.
- Practitioners should advise clients to seek specific performance promptly; prolonged delay may weaken claims for equitable adjustments.
