Supreme Court: No Adverse Inference can be drawn against Plaintiff for failing to produce Passbook in a suit for Specific Performance

Supreme Court: No Adverse Inference can be drawn against Plaintiff for failing to produce Passbook in a suit for Specific Performance

The Supreme Court in a suit for specific performance ruled that unless the plaintiff was called upon to produce the passbook either by the defendant or, the Court orders him to do so, no adverse inference can be drawn.

The division bench comprising of Justices M.R. Shah and B.V. Nagarathna while hearing the appeal filed by the appellant- Basvaraj against the impugned order and judgment passed by the High Court of Karnataka by which the High Court had allowed appeal preferred by the respondents- Padmavathi and another, quashed and set aside the judgment and decree passed by the Trial Court. The Apex Court further held that the High Court had seriously erred in reversing the findings recorded by the learned Trial Court on the readiness and willingness of the appellant.

The brief facts of the cases are that the respondent no. 1 had executed an agreement to sell dated 13 March, 2007 in favor of the appellant also the buyer agreeing to sell the land in question on or before 31 July, 2007 for a sale consideration of Rs. 12,74,000/-. Rs. 3 lakh were paid as earnest money. The receipt was issued by respondent No. 1 for the same. That thereafter, as respondent No. 1 – seller did not execute the sale deed, the appellant got issued a legal notice dated 20 November, 2007 asking the respondent(s) to receive the balance sale consideration and execute the sale deed.

The seller replied to the legal notice vide reply dated 3, December, 2007 denying the execution of agreement to sell. That thereafter, the appellant – buyer filed the suit for specific performance on 14 February, 2008. The original respondents – sellers filed their written statement and opposed the suit. The respondents denied the execution of agreement to sell. The respondents also stated in their written statement that the appellant was not ready to perform his part of the contract. Therefore, the respondents denied readiness and willingness on the part of the appellant – buyer to perform his part of the contract.

The learned Trial Court also believed the appellant's case as to the payment of earnest money of Rs. 3 lakh to the seller. The learned Trial Court also held that the appellant – buyer was ready and willing to perform his part of the contract. That pursuant to the judgment and decree passed by the learned Trial Court, the buyer- appellant deposited an amount of Rs. 9,74,000 - before the learned Trial Court which was still reported to be lying with the Trial Court.

Feeling aggrieved and dissatisfied with the judgment and decree passed by the learned Trial Court, respondents– sellers preferred the appeal before the High Court. By the impugned judgment and order the High Court had allowed the said appeal and set aside the judgment and decree passed by the learned Trial Court, mainly on the ground that the plaintiff was not ready and willing to perform his part of the contract. The impugned judgment and order passed by the High Court was the subject matter of present appeals.

The Apex Court noted that from the judgment and order passed by the High Court, it appeared that the reasoning given by the High Court is that the plaintiff has not proved that he had the cash and/or amount and/or sufficient funds/means to pay the balance sale consideration, as no passbook and/or bank accounts was produced.

The Top Court relied upon the decision in Indira Kaur and Ors. Vs. Sheo Lal Kapoor; (1988) 2 SCC 488 and Ramrati Kuer Vs. Dwarika Prasad Singh; (1967) 1 SCR 153, stated that "in the case of Indira Kaur, this Court after considering the observations made by this Court in the case of Ramrati Kuer, has set aside the findings recorded by three courts below whereby an adverse inference had been drawn against the plaintiff therein for not producing the passbook and thereby holding that the plaintiff was not ready and willing to perform his part of the agreement."

Applying the same law, the Supreme Court quashed and set aside the judgment and order passed by the High Court.