Muddam Raju Yadav vs B. Raja Shaker(D) Thru Lrs

2026 INSC 214 REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3255 OF 2026 (ARISING OUT OF S.L.P. (CIVIL) NO. 6453 OF 2024)

MUDDAM RAJU YADAV APPELLANT(S)

VERSUS

B. RAJA SHANKER (D) THROUGH LRS. & ORS. RESPONDENT(S)

JUDGMENT

PRASHANT KUMAR MISHRA, J.

1. Leave granted.

2. The present Appeal is preferred by the appellant/plaintiff whose suit

for specific performance of agreement of sale dated 4.6.2002 was decreed by

the Trial Court. However, in appeal by the respondent(s)/defendant(s), the

High Court has set aside the judgment and decree of the Trial Court.

Resultantly, the suit filed by the appellant/plaintiff stands dismissed.

3. The sale agreement dated 4.6.2002 was in respect of house property

bearing No.1-91/1 (Old No.1-17/2) constructed on Plot No.l admeasuring

406.33 square yards in Survey No. 1 situated at Medchal Village and

Mandal, Ranga Reddy District. The agreement was for a total sale

consideration of Rs.13,00,000/- (Rupees Thirteen Lakh) and defendant(s) Signature Not Verified Digitally signed by NISHA KHULBEY had received a sum of Rs.6,00,000/- (Rupees Six Lakh) as advance. The Date: 2026.03.10 16:59:05 IST Reason:

agreement was registered on the same day with the Office of the Sub-

Civil Appeal @ SLP (C) No.6453 OF 2024 Page 1 of 6 Registrar, Medchal, Ranga Reddy District. As per the terms of agreement,

the plaintiff had to pay the balance amount of sale consideration of

Rs.7,00,000/- (Rupees Seven Lakh) to the defendant(s) at the time of

execution of the sale deed within 11 months from the date of agreement. As

per the plaintiff, he was always ready and willing to pay the balance amount

of sale consideration; however, the defendant(s) avoided to receive the

amount and execute the sale deed on one pretext or the other. The plaintiff

issued a legal notice dated 25.4.2003 calling upon the defendant(s) to

execute the sale deed. However, despite the receipt of legal notice, the

defendant(s) neither submitted any reply nor executed the sale deed,

necessitating filing of the subject suit.

4. According to the defendant(s), the plaintiff is an unlicensed money

lender and he lent an amount of Rs.6,00,000/- (Rupees Six Lakh) towards

hand loan to the defendant(s) holding the original sale deed of the

defendant(s) in respect of the suit schedule property with an understanding

that within 12 months from the date of the agreement, the defendant(s)

would return Rs.6,00,000/- (Rupees Six Lakh) and the plaintiff would return

the original title deeds and would also get the registered agreement

cancelled. It was also agreed that in the event of non-discharge of the loan

amount within 12 months, the defendant(s) would transfer the suit schedule

property in favour of the plaintiff as per the prevalent market value, until

which time, the plaintiff had undertaken and declared that he would not

exercise any right, interest, title or claim over the suit property. The

understanding was reduced into writing, signed by the plaintiff on the same

Civil Appeal @ SLP (C) No.6453 OF 2024 Page 2 of 6 day i.e., 4.6.2002 followed by the registered agreement of sale dated

4.6.2002 and, thus, the agreement was nothing but a sham and nominal

document. Pursuant to the written understanding dated 4.6.2002, the

plaintiff acknowledged the receipt of Rs.1,00,000/- (Rupees One Lakh) on

25.9.2002 towards part repayment of the loan amount, but successfully

evaded to pass a receipt acknowledging the payment of Rs.1,50,000/-

(Rupees One Lakh and Fifty Thousand) paid on two occasions in the months

of the November and December 2002. When the defendant and his sons

insisted for receipt of the said repayments of the loan amount, the plaintiff

issued a legal notice presenting a new version that he was a bona fide

purchaser on the strength of sale agreement and suppressing the true fact

of loan transaction. It was, therefore, pleaded by the defendant(s) that as

per the understanding, the sale consideration was determinable only after

12 months from the date of the agreement of sale and that too in the event

of the defendant(s) failing to return the loan amount of Rs.6,00,000/-

(Rupees Six Lakh) to the plaintiff. Thus, as per the defendant(s), the sale

agreement is not enforceable, being a sham and nominal document. The

defendant(s) also stated that the market value of the suit property was much

higher than what has been quoted in the agreement.

5. In the course of trial, the plaintiff examined himself as PW-1 and got

marked Exhibits A-1 to A-7 on his behalf, out of which, the following are the

material documents:

i. Exhibit A-1 was the agreement of sale dated 4.6.2002;

Civil Appeal @ SLP (C) No.6453 OF 2024 Page 3 of 6 ii. Exhibit A-2 was a no objection letter executed by the sons of the

defendant;

iii. Exhibit A-3 was an office copy of the legal notice dated 25.4.2003;

and

iv. Exhibit A-7 was the statement of account of the plaintiff issued by

the State Bank of Hyderabad, Old Bowenpally.

6. On the other hand, the defendant examined his sons namely, Dr. B.

Venuprakash and Shri B. Shyamsunder as DW-1 and DW-2 respectively.

He got marked Exhibit B-1 – a photocopy of the receipt for Rs.1,00,000/-

(Rupees One Lakh) and Exhibit B-2 – the Memorandum of Understanding1

dated 4.6.2002.

7. The Trial Court decreed the suit on the reasoning that the

defendant(s) has not denied the execution of the agreement and receipt of

the legal notice and since the plaintiff was in possession of required fund for

payment of the balance sale consideration as reflected in Exhibit A-7, the

bank account statement of the plaintiff, he was always ready and willing to

perform his part of the contract and was entitled for decree of specific

performance. Under the impugned judgment, the High Court has allowed

the defendants’ appeal to set aside the judgment of the Trial Court.

8. We have heard the learned counsel for the parties and perused the

material papers.

9. Since the High Court has recorded a finding that in view of Exhibit B-

2 – Memorandum of Understanding dated 4.6.2002 executed by the parties

1 For short, “the MoU”

Civil Appeal @ SLP (C) No.6453 OF 2024 Page 4 of 6 on the same day on which the agreement was entered into between them,

the sale agreement appears to be a sham and nominal document, we shall

examine the correctness of the said finding of the High Court.

10. It is the case of the defendant(s) from the very beginning that the sale

agreement was executed by way of security for a loan of Rs.6,00,000/-

(Rupees Six Lakh) advanced by the plaintiff to the defendant(s) and the same

was clearly reflected as recited in the MoU (Exhibit B-2). It is to be seen that

said MoU was on a non-judicial stamp paper bearing document no.47663

and the no objection letter (Exhibit A-2) executed by the sons of the

defendant was on Rs.100/- non-judicial stamp paper bearing document

no.47662. Both the documents were dated 4.6.2002 and purchased from

the same stamp vendor. The witnesses to both the documents were also one

and the same. All these would probablise the defence of the defendant(s)

that the agreement of sale was not a genuine transaction but was executed

as a security for a loan transaction.

11. Although Exhibit B-1, the photocopy of the receipt executed by the

plaintiff while receiving a sum of Rs.1,00,000/ (Rupees One Lakh) towards

repayment of loan from the defendant(s), has been found not admissible

and, hence, cannot be relied upon, yet the execution of the MoU (Exhibit B-

2) clearly makes out a very strong probable case to prove that the subject

agreement was a sham and nominal document.

12. In a suit for specific performance, the conduct of the parties is

significant as it assists the Court in evaluating the evidence to find out the

bona fides of the parties at the time of execution of the agreement. Even a

Civil Appeal @ SLP (C) No.6453 OF 2024 Page 5 of 6 slight doubt in the mind of the Court that the plaintiff was not acting

bonafidely and that the material facts, having bearing on the agreement,

have been withheld in the agreement itself and from the Court also, the

equitable and discretionary relief has to be denied. A plaintiff approaching

the Court with uncleaned hands, like in the present case—the plaintiff

having withheld the document i.e., MoU (Exhibit B-2), as the same was

nowhere mentioned in the plaint, the present was a fit case for denial of

relief of specific performance and the High Court has rightly allowed the

appeal preferred by the respondent(s)/defendant(s) to set aside the judgment

and decree passed by the Trial Court.

13. For the foregoing reasons, we do not find any substance in this

Appeal. Hence, the Appeal fails and the same is, accordingly, dismissed.

………………………………………J. (PRASHANT KUMAR MISHRA)

………………………………………J. (PRASANNA B. VARALE)

NEW DELHI;

MARCH 10, 2026.

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