Specific Performance Cannot Be Decreed On Fabricated Sale Agreement Bearing Sequential Stamp Papers From Decade-Old Mortgage; Section 340 CrPC Applicable: Andhra Pradesh High Court

"Generally, when Agreement is entered into with a stranger, buyer will verify the title, including obtaining an Encumbrance Certificate over the property, only then would they enter into the Agreement... This is not only abnormal but also highly improbable, which is not explained properly by the Plaintiffs," Andhra Pradesh High Court

AMARAVATI — Dismissing an appeal against the dismissal of a specific performance suit, a Division Bench of the High Court of Andhra Pradesh comprising Justice D. Ramesh and Justice Alapati Giridhar observed on November 10, 2026, that courts cannot grant equitable relief where the underlying agreement of sale and payment receipts are shown to be fabricated using blank stamp papers originating from a prior mortgage transaction executed nearly eight years earlier.

The Court clarified that while it would not initiate suo motu action, parties are at liberty to file an application under Section 340 of the Code of Criminal Procedure for forging valuable securities punishable under Section 467 of the Indian Penal Code.

The appellants instituted an original suit seeking specific performance of an agreement of sale dated June 8, 2005, allegedly executed by the respondent for 2.74 acres of land upon receiving an advance consideration of Rs. 20 lakhs, followed by an alleged further payment of Rs. 15 lakhs under a receipt dated March 11, 2006. The respondent resisted the suit, categorically denying the execution and contending that the documents were forged by a financier who had retained signed blank stamp papers and cheques during an unrelated mortgage transaction in 1997. After the trial court dismissed the suit finding the documents fabricated, the plaintiffs appealed.

Whether the plaintiffs established the genuine execution of the agreement of sale and receipt and proved their readiness and willingness to perform their contractual obligations.

Whether the abnormal circumstance of stamp papers bearing consecutive serial numbers from a transaction executed over seven years earlier, coupled with identical typewriter ink impressions, probabilised the defence of forgery and warranted prosecution under Section 340 of the Code of Criminal Procedure read with Section 467 of the Indian Penal Code.

Unexplained use of historical stamp papers matching prior mortgage establishes fabrication

Examining the original records, the High Court observed that the stamp papers used for the 2005 agreement of sale bore serial numbers strictly sequential to those used in a registered mortgage deed executed by the respondent in favour of a third-party financier in September 1997. The Bench held that the plaintiffs failed to tender any plausible explanation as to how stamp papers purchased nearly eight years earlier for a separate transaction surfaced in an alleged arms-length land sale.

The Court held that an ordinary, prudent buyer entering into a substantial property transaction with a stranger would invariably obtain an Encumbrance Certificate and verify title prior to parting with consideration.

Failure to verify encumbrance before paying substantial advance consideration defies prudent conduct

The Bench underscored that neither plaintiff obtained an Encumbrance Certificate prior to handing over Rs. 20 lakhs at the time of the agreement or prior to parting with a further Rs. 15 lakhs nine months later. Emphasising that this conduct was unnatural for literate businessmen, the Court observed that entrusting the drafting of the agreement to a stranger on ancient stamp papers without verifying title documents was highly improbable.

The Court noted that the plaintiffs' witnesses offered irreconcilable versions regarding the place of execution, the drafting of the agreement, the total agreed consideration per acre, and whether payments were made jointly or split in equal halves.

Identical typewriter ink impressions across nine-month gap indicate simultaneous creation of documents

Scrutinising the physical characteristics of the agreement of sale and the subsequent receipt, the Division Bench noted that despite an alleged nine-month interval between the two transactions, the ink colour, stroke thickness, and type impressions were identical.

The Court observed that generally, when documents are typed months apart, the stroke thickness and ink impressions vary, and the uniformity across both exhibits demonstrated that the agreement and receipt were typed simultaneously to fit pre-existing blank signatures.

Section 340 CrPC inquiries do not determine guilt but examine expediency of criminal prosecution

Addressing the legal framework governing forged valuable securities, the Bench extensively analysed Sections 463, 464, and 467 of the Indian Penal Code, reiterating that inserting unauthorized terms or ante-dating documents amounts to criminal forgery. Adverting to Supreme Court precedents, the Court explained the procedural threshold under Section 340 of the Code of Criminal Procedure for initiating prosecution against litigants and abettors who rely on fabricated instruments in judicial proceedings.

The Bench highlighted that the court at the stage of Section 340 of the Code of Criminal Procedure does not decide the guilt or innocence of the accused party, but merely examines whether the material on record renders an inquiry expedient in the interest of justice.

In conclusion, the High Court held that the appellants failed to prove the genuineness of the agreement of sale and receipt, finding no illegality or infirmity in the trial court's dismissal of the specific performance suit. The Court dismissed the appeal with costs while granting liberty to the parties to move an appropriate application under Section 340 of the Code of Criminal Procedure before the trial court.

Date of Decision: November 10, 2026