The Andhra Pradesh High Court has held that fabricating sale agreements to defeat contractual rights and transferring disputed property in breach of a court undertaking can attract prosecution under Sections 193 and 206 IPC.

Section 193 IPC provides for punishment for giving or fabricating false evidence. Section 191 is the provision pertaining to giving false evidence also known as perjury. Section 206 IPC deals with fraudulent removal, concealment or transfer of property to prevent its lawful seizure or availability in legal proceedings.

A Division Bench of Justice D. Ramesh and Justice Alapati Giridhar was hearing appeals arising from competing claims over the same parcel of land.

The Court explained that Section 206 can apply when a party fraudulently transfers property in anticipation of a decree or order in a pending civil suit.

The Court found that rival sale agreements had been fabricated in collusion to defeat the plaintiff's claim. It also held that the subsequent sale of the property during the pendency of the appeals, despite an undertaking not to alienate it, warranted prosecution under Section 206 IPC.

The Court said:

“Thus, the evidence on record reveals that the agreements under Ex.B15 and B.15 are fabricated with ante-dates of 29.11.2006 and 25.11.2006 respectively by the 1st and 2nd Defendant in the name of 4th and 6th Defendants respectively i.e., much prior to even issuance of the stamps to the Stamp Vendor on 16.12.2006 in the Registrar's Office. The same is also fairly conceded by the learned counsel for Appellants as stated supra. Further these three agreements/Ex.B1, B15 and B20 are attested and scribed by the same persons. The Plaintiff's case is that these three agreements are executed on the same day written with the same pen, as the DW.3/6th Defendant, who was doing a high profile job as stated supra, in his cross examination specifically stated that he did not know the writings in Ex.B.1, B.15, agreement/Ex.B20 dated 25.11.2006 are with one pen and executed at the same point in time. This version also supporting the theory of the Plaintiff.

In view of the material and law as stated supra, the Court is opinion, that the 1st, 2nd, 4th to 6th Defendants, DW.5 and DW.6 have fabricated the agreements/Ex.B15 and B20 and submitted false pleas and evidence. Thus, it is expedient in the interest of justice that they are liable for prosecution for committing the Offence for producing the agreements and giving false evidence in the Suits and also asserting them in these Appeals. Thus, they are liable for prosecution under Section 193 of IPC. As the 1st Defendant died during the pendency of the Appeal, the prosecution against him is abated”

The dispute arose from an agreement of sale executed in January 2007. The first and second defendants, who owned the property, allegedly agreed to sell it to the plaintiff for ₹2.10 lakh per acre. Their daughter was arrayed as the third defendant.

The plaintiff paid an advance of ₹2 lakh under the agreement. The balance consideration was to be paid by April 2007, after measurement of the property and before execution of a registered sale deed.

Seeking to enforce the agreement, the plaintiff filed a suit for specific performance against the first to third defendants. He relied on the sale agreement, advance payment receipt, bank statements and passbooks, newspaper publication, legal notice, and testimony of the attesting witnesses and scribe to establish the agreement, his financial capacity, and readiness and willingness to pay the balance consideration.

Meanwhile, the fourth to sixth defendants claimed that the owners had separately agreed to sell portions of the same property to them. They filed three suits seeking specific performance of those alleged agreements, raising competing claims over the same property.

The trial court decreed the plaintiff's suit and dismissed the three competing suits. The fourth to sixth defendants challenged the dismissal of their suits, while the other defendants appealed against the decree in the plaintiff's favour. The appeals were heard together by the High Court.

While the appeals were pending, the appellants had undertaken not to encumber the property. However, in December 2022, the second defendant, along with her son and daughter, executed sale deeds in favour of third parties.

Before the High Court, the defendants disputed the plaintiff's readiness and willingness to pay the balance consideration and challenged the enforceability of his agreement.

The plaintiff, in turn, contended that the competing agreements had been fabricated to defeat his contractual rights.

The Bench found that the plaintiff had proved the agreement and his readiness and willingness to perform his part of the contract. His evidence and that of his witnesses supported his case, while the defendants failed to discredit his financial capacity during cross-examination.

Examining the agreements relied upon by the fourth to sixth defendants, the Court found that two agreements allegedly executed in November 2006 bore dates earlier than the issuance of the stamp papers by the Registrar's Office in December 2006. The agreements were also attested and scribed by the same persons.

The Court found that the first and second defendants had fabricated agreements in favour of the fourth and sixth defendants to defeat the plaintiff's claim, with the involvement of the other defendants, attestors and scribe.

It held that the suits based on the fabricated agreements were liable to be dismissed and that the first, second and fourth to sixth defendants, along with two witnesses, were liable for prosecution under Section 193 IPC for fabricating agreements and giving false evidence. The Court clarified that such prosecution would proceed irrespective of the finding on the plaintiff's readiness and willingness. The prosecution against the first defendant stood abated following his death during the pendency of the appeal.

The Bench next examined the December 2022 sale. Explaining Section 52 of the Transfer of Property Act, which embodies the doctrine of lis pendens, the Court noted that transfers of immovable property during pending litigation cannot affect other parties' rights without the Court's permission. It observed that such transfers could prejudice the successful party and defeat the proceedings, and held that fraudulent transfers in breach of this principle may attract prosecution under Section 206 IPC, subject to the prescribed procedure.

Applying these principles, the Court held that the second defendant had sold the property in breach of her undertaking and was liable for prosecution under Section 206 IPC.

“The Appellants could not demonstrate any material infirmity warranting interference in the Decree and Judgment of the Trial Court,” the Court said.

The Court also granted the plaintiff liberty to initiate proceedings against the alleged conspirators under Section 467 IPC by lodging a report with the jurisdictional police.

It directed the Registrar (Judicial) to ensure that complaints under Sections 193 and 206 IPC were filed before the jurisdictional Magistrate.

To address the subsequent sale, the Court directed the District Registrar, Nellore, and the Sub-Registrar, Kovur, to cancel the registrations made in December 2022 concerning the property and prevent further registrations except in accordance with the judgment.

Accordingly, the High Court dismissed two appeals with costs and dismissed the remaining three as abated because the legal representatives of the deceased first defendant had not been brought on record.

Counsel for the Appellants: Sri P. Rajasekhar

Counsel for the Respondents: Sri O. Manohar Reddy, Senior Counsel, representing Sri C. Subodh