A buyer who first sued only for an injunction, and then withdrew that suit to file a fresh one for specific performance without having reserved leave at the outset, is barred by Order II Rule 2 of the CPC, the Supreme Court has held, while also finding that an alleged Rs 20.5 crore oral land deal was never proved to be a concluded contract.
New Delhi: The Supreme Court has allowed an appeal by Bombay Garage Ahmedabad Limited and set aside the concurrent judgments of the Trial Court and the High Court that had decreed a suit for specific performance of an alleged oral agreement to sell the company’s land, dismissing the suit as both barred under Order II Rule 2 of the Code of Civil Procedure, 1908 and unproven on merits [Bombay Garage Ahmedabad Limited and Others v. J P Iscon Private Ltd. and Another].
A Bench of Justice J.B. Pardiwala and Justice K. Vinod Chandran held that the plaintiff had failed to establish a concluded contract and that the findings of the courts below bordered on perversity. The judgment was authored by Justice Vinod Chandran.
Background of the case
The plaintiff, J P Iscon Private Ltd., claimed that the company’s property had been orally agreed to be sold to it, first for Rs 18.51 crore and later, after the defendants demanded a higher price, for Rs 20.50 crore. It asserted that Rs 5.11 lakh was paid in cash as token advance and a cheque of Rs 5 crore was handed over, that the company forwarded title documents by a letter of November 25, 2006, and that the defendants refused to execute the sale deed on May 8, 2007.
The plaintiff first filed a suit only for a permanent injunction restraining the company from alienating or altering the property. That suit was withdrawn on the ground that settlement talks were under way, with a request in the withdrawal pursis to file afresh. A fresh suit was then filed in 2007 seeking specific performance, and its pleadings were amended in 2011. The Trial Court decreed the suit and the High Court affirmed the decree.
What the parties argued
Senior Advocate Mihir Thakore, for the appellants, argued that the relief of specific performance was available when the injunction suit was filed, that no leave had been taken then, and that the second suit was therefore barred under Order II Rule 2. On facts, he contended that the courts had relied on inconsistent oral testimony and shifting pleadings, that the letter relied on merely transmitted documents, that the advance was unproved, and that the negotiations were conducted by the son-in-law of the person in charge of the company, who had no authority. He also invoked Section 46 of the Companies Act, 1956 to argue that any such agreement lacked the consent of the company’s Board.
Senior Advocate Deven Parikh, for the plaintiff, argued that liberty to file afresh had been sought in the withdrawal pursis and had to be inferred from the order, that the case was governed by Order XXIII Rule 1(3) and not Order II Rule 2, and that the second suit was filed within limitation. On facts, he pointed to the cash advance and the Rs 5 crore cheque, and to the evasive answers of the defence witnesses, which he said warranted an adverse inference.
Second suit barred by Order II Rule 2
Reviewing the Constitution Bench ruling in Gurbux Singh v. Bhooralal and later decisions including Virgo Industries, Vurimi Pullarao, Sucha Singh Sodhi and Cuddalore Powergen Corporation Ltd. v. Chemplast Cuddalore Vinyls Ltd., the Court said the bar depends on the facts of each case. Here, the first plaint itself pleaded the three meetings, the payments and a clear refusal on May 8, 2007, so the relief of specific performance was fully available when the injunction suit was filed. The Court held:
“No leave was sought at the time of filing of the suit and the liberty sought at the time of withdrawal does not cure the defect of leave to be obtained at the time of institution of the suit.”
Rejecting the reliance on Order XXIII Rule 1(3), the Court explained that the provision permits a fresh suit on the same subject-matter or part of the claim after withdrawal with leave, but does not revive a relief that the plaintiff omitted in the first suit and is deemed to have relinquished. It added that the plaintiff could have sought an amendment in the first suit but did not.
No concluded contract proved
Reiterating from Brij Mohan v. Sugra Begum and K. Nanjappa v. R.A. Hameed that specific performance can rest on an oral agreement only on strict proof of a concluded contract, the Court found the plaintiff’s case riddled with inconsistencies. The two plaints described the meetings differently, the refusal date in the first suit disappeared from the second, and the evidence placed the first meeting at a witness’s official residence, a fact pleaded nowhere. On the cheque, the Court observed:
“When the cheque of Rs.5,00,00,000/- given as an advance, had not been encashed, it is a clear indication that there is no concluded contract.”
The Court discounted the testimony of the plaintiff’s representative as interested and uncorroborated, and that of a director as hearsay. On PW2, Vajubhai Vala, a former Minister and later Governor of Karnataka at whose residence the first meeting was said to have taken place, the Court found no pleading of his presence and treated his account of a telephone confirmation as hearsay. It held:
“The status of the witness has no relevance insofar the oral testimony is concerned, since there is no presumption that a person having some political status would only speak truth before Court.”
The Court also faulted the courts below for leaning on the evasive answers of the defence witnesses, holding that the burden of proving the contract lay squarely on the plaintiff. The letter of November 25, 2006 only transmitted documents, its witnesses were never examined, and the son-in-law who negotiated had no official role in the company. If the plaintiff relied on his promises, the Court said, it did so at its own peril.
Operative directions
The Court said it was not convinced the meetings took place as pleaded, and could not even find that the token advance of Rs 5.11 lakh was paid, so no question of refund arose. It did not examine the authority of the company’s person in charge, finding that unnecessary. The appeal was allowed, the judgments of the Trial Court and the High Court were set aside, and the suit for specific performance was dismissed, with the parties bearing their own costs.
Case Title: Bombay Garage Ahmedabad Limited and Others v. J P Iscon Private Ltd. and Another
Case Number: Civil Appeal arising out of SLP (C) No. 25909 of 2024
Citation: 2026 INSC 1066
Bench: Justice J.B. Pardiwala and Justice K. Vinod Chandran, Supreme Court of India
Date of Judgment: September 29, 2026
Appearance: Senior Advocate Mihir Thakore for the appellants; Senior Advocate Deven Parikh for the respondents