Admission Of Signatures On Agreement To Sell Shifts Burden To Defendant To Disprove Receipt Of Earnest Money: Punjab & Haryana HC

"A written agreement voluntarily executed by parties is not an empty formality. It embodies the consensus ad idem between the contracting parties and carries with it a presumption that the statements incorporated therein truly represent the transaction unless successfully rebutted." Punjab and Haryana High Court, in a significant ruling, held that once a defendant admits their signatures on an agreement to sell, the burden of proof shifts to them to establish that the recitals regarding the receipt of earnest money are incorrect.

A bench of Justice Deepak Gupta observed that a mere oral denial during the trial cannot displace a solemn written acknowledgment executed by the defendant. The Court emphasized that under the Indian Evidence Act, admissions constitute substantive evidence against the maker and facts admitted need not be proved afresh by the plaintiff.

The matter arose from a Regular Second Appeal filed by the defendant (appellant) challenging the concurrent findings of the trial court and the first appellate court, which had decreed a suit for specific performance in favor of the plaintiff (respondent). The dispute pertained to an agreement to sell dated August 2, 2016, involving 40 kanals of agricultural land for a total consideration of ₹50 Lakhs, out of which ₹40.80 Lakhs was allegedly paid as earnest money. While the defendant admitted his signatures on the document, he contended that no money was actually exchanged and that the agreement was a result of financial transactions involving a third party.

The primary question before the court was whether the admission of signatures on an agreement to sell shifts the burden of proof regarding the passing of consideration to the defendant. The court was also called upon to determine whether the mandatory requirement of continuous readiness and willingness under Section 16(c) of the Specific Relief Act necessitates the production of exhaustive documentary proof like bank statements or income tax returns. Finally, the court examined the scope of interference under Section 100 CPC against concurrent findings of fact.

Admission Of Execution Relieves Plaintiff From Proving Document Afresh

The Court observed that the execution of the agreement was no longer in serious dispute as the defendant had categorically admitted his signatures, the purchase of stamp papers, and the fact that the agreement was written in his presence. Invoking Sections 17, 21, and 58 of the Indian Evidence Act, 1872, the bench noted that admissions are substantive evidence.

Justice Gupta remarked that once the defendant admitted the execution, the plaintiff was relieved of the burden of proving the document's execution. The Court relied on the Supreme Court's precedent in Narayan Bhagwantrao Gosavi Balajiwale v. Gopal Vinayak Gosavi, noting that admissions, unless successfully explained, constitute sufficient evidence of the facts admitted.

Oral Testimony Cannot Contradict Recitals In Written Agreement

The Court dealt sternly with the defendant's attempt to deny the receipt of ₹40.80 Lakhs despite the written recital in the agreement. It was held that Sections 91 and 92 of the Indian Evidence Act embody a "salutary principle" that where terms are reduced to writing, the document itself is the best evidence.

The bench observed that oral evidence cannot ordinarily be adduced to contradict, vary, or subtract from written terms except in specific situations like fraud or coercion, which the appellant failed to prove. Referencing Roop Kumar v. Mohan Thedani, the Court noted that the object is to prevent parties from resiling from solemn written contracts by setting up inconsistent oral versions.

"A mere oral denial made years later during the course of trial cannot displace a solemn written acknowledgment executed by the defendant himself."

Readiness And Willingness Must Be Inferred From Cumulative Conduct

On the issue of Section 16(c) of the Specific Relief Act, 1963, the Court clarified that "readiness" denotes financial ability while "willingness" refers to the conduct revealing an intention to perform. The bench rejected the appellant's argument that the plaintiff must prove continuous possession of the entire sale consideration in cash.

Citing J.P. Builders v. A. Ramadas Rao, the Court held that a purchaser is not expected to carry the entire consideration in their pocket throughout the subsistence of the contract. What is required is proof of the capacity and intention to complete the transaction when called upon to do so.

Financial Capacity Not Restricted To Bank Statements Or IT Returns

The Court held that financial capacity is not required to be established only through bank statements or income-tax returns, as these are merely one mode of proof. In the present case, the plaintiff had appeared before the Sub-Registrar on the stipulated date with a cheque and later with a demand draft, which were recorded through affidavits before an Executive Magistrate.

Justice Gupta observed that these acts furnished the "best possible evidence" of the plaintiff's bona fides. The Court noted that a purchaser who repeatedly appears before the registering authority and issues legal notices cannot be accused of lacking readiness and willingness.

"Insistence upon proof of continuous possession of funds irrespective of the surrounding circumstances would defeat the equitable nature of the remedy itself."

Limited Scope Of Interference Under Section 100 CPC

Finally, the Court addressed the jurisdictional limits under Section 100 of the Code of Civil Procedure. It reiterated the settled legal principle that the High Court cannot re-appreciate evidence in a Regular Second Appeal merely because another view may be possible.

Referencing Kondiba Dagadu Kadam v. Savitribai Sopan Gujar, the bench held that interference is permissible only where the findings are perverse, based on no evidence, or arrived at by ignoring settled legal principles. Finding no such infirmity, the High Court affirmed the concurrent findings of the lower courts.

The High Court dismissed the Regular Second Appeal, concluding that the plaintiff had successfully proved both the execution of the agreement and his continuous readiness to perform his part of the contract. The Court found that equity leaned in favor of the plaintiff, as the defendant had avoided performance without any legally sustainable justification after receiving a substantial portion of the sale consideration.

Date of Decision: 10 July 2026