The Kerala High Court recently established that a decree for specific performance cannot be granted based on an oral agreement unless there is cogent evidence to prove such agreement in the first place.
Justice K. Babu observed that the plea of an oral contract for reconveyance can be accepted only if there is cogent and convincing evidence to establish it.
"The First Appellate Court lost sight of the settled principle that a decree for specific performance could not be granted based on an oral agreement unless there was cogent evidence to prove the same."
The Court found that the respondent failed to adduce oral evidence in regard to the nature of the document despite the burden of proof in respect of the property being on him.
The respondent herein had executed a sale deed in favour of the appellant in respect of his property.
According to the respondent, he had borrowed Rs. 1 lakh from the appellant and the impugned sale deed was executed as a security for this transaction. He added that on the very same day, they had entered into an oral agreement in which the appellant had agreed to re-convey the property on repayment of the said amount with interest. However, it is his case that the appellant refused to reconvey the property even after receipt of the amount.
Aggrieved by this, he moved the trial court seeking specific performance of the oral contract allegedly entered into by the parties.
On the other hand, the appellant denied the existence of an oral contract and argued that he had purchased the said property after paying the quoted price as per the sale deed executed among them. He argued that the respondent had no right or possession over the property.
The trial court dismissed the plea moved by the respondent finding that he was not entitled to the specific performance of the contract as pleaded. This finding was, however, overturned by the District Court.
Challenging the decision of the District Court, the appellant moved the High Court with an appeal.
Advocate T.N. Manoj appearing for the appellant contended that the sale deed being a registered document, carries a mandatory presumption under Section 34(2) of the Registration Act regarding execution and registration and in the absence of pleadings and cogent evidence tendered from the side of the respondent to rebut such a presumption, the First Appellate Court was not justified in granting a decree for specific performance.
He further contended that the First Appellate Court ignored the settled principle that there must be cogent and reliable evidence to grant the specific performance based on an oral agreement.
Advocate G. Sreekumar Chelur appearing for the respondent argued that he could adduce sufficient evidence to enter into a conclusion that there was an earlier agreement for re-conveyance between the parties at the time of execution of the sale deed.
However, although the respondent was allowed to adduce evidence, he could not produce convincing evidence or circumstance to enter into a conclusion that an oral agreement of the sale of the property had taken place.
Therefore, the appeal was allowed and the judgment of the District Court was set aside, thereby restoring the decision of the trial court.
Case Title: Bhasy v. Thomas & Ors.
Citation: 2022 LiveLaw (Ker) 222