Delhi HC Calls Buyer’s ₹6.93-Crore Property Suit Vexatious, Deletes Seller’s Relatives And Brokers

The plaintiff alleged that he paid Defendant No. 1 ₹6.93 crore in July 2018 towards the purchase of a commercial property, under an agreement to sell dated 1 August 2018.

He claimed that Defendant Nos. 2–7 had represented that the property was free from encumbrances, but later discovered a mortgage in favour of HDFC Bank.

He sued for refund with interest, alleging fraud and seeking joint and several liability.

Defendant Nos. 2–7 applied for deletion from the array of parties under Order I Rule 10 CPC, contending that they were not parties to the agreement and had received no consideration.

Defendant No. 1 maintained that the plaintiff knew of the mortgage and that the property was later sold to Defendant No. 8 in continuation of the original transaction.

The Court considered evidence of the plaintiff’s family’s commercial and financial relationship with Defendant No. 8 and its director.

The Court also addressed the plaintiff’s chamber appeal against the deletion of a broker and identified separate questions concerning the agreement’s stamping and possible rejection of the plaint.

Whether Defendant Nos. 2–7 were necessary or proper parties to the plaintiff’s refund suit.

Whether the plaint pleaded a legally sufficient cause of action for fraud against Defendant Nos. 2–7.

Whether the suit should be rejected as vexatious, and whether the 2018 agreement to sell was liable to be impounded as unstamped; these matters were raised for further submissions rather than finally determined.

Order I Rule 10 CPC permits deletion of a party who is neither necessary nor proper for adjudication of the questions in the suit; the distinction between necessary and proper parties was considered with reference to Kasturi v. Iyyamperumal.

Order VI Rule 4 CPC requires full and specific particulars of fraud; general or vague allegations do not suffice, as held in Bishundeo Narain v. Seogeni Rai and reiterated in Ranganayakamma v. K.S. Prakash.

Under Sections 19 and 64 of the Contract Act, the plaintiff relied on alleged fraud or misrepresentation to avoid the contract and seek restitution, but the exception to Section 19 precludes avoidance where the truth could have been discovered with ordinary diligence.

The Court also referred to the buyer’s due-diligence obligations under Section 3 and Section 55(3) of the Transfer of Property Act, applying the doctrine of caveat emptor.

For the unresolved stamping issue, it referred to Section 53A of the Transfer of Property Act, Section 17(1A) of the Registration Act, and Section 35 and Article 23A of the Stamp Act.

The plaintiff’s claim for a refund was principally against Defendant No. 1, the contracting party and recipient of the consideration.

The other defendants were not parties to the agreement; Defendant Nos. 2 and 3 had signed only as witnesses, and the plaintiff did not plead a specific legal duty or adequately particularised representation by Defendant Nos. 2–7 that could support independent liability.

The Court held that witnessing an agreement did not make a witness liable for its contractual obligations, and that the fraud allegations lacked the particulars required by Order VI Rule 4.

Separately, the Court considered the undisputed commercial dealings between the plaintiff’s family and Defendant No. 8, the alleged continuity between the 2018 and 2019 agreements, and the plaintiff’s failure to seek cancellation of the 2021 sale deed.

It regarded these matters as supporting the defendants’ account and as raising concerns about the suit’s bona fides.

The Court also considered whether the plaintiff’s due diligence should have revealed the absence of the original title documents.

These observations informed its direction for further submissions on rejection of the plaint; the Court did not finally decide that question.

The plaintiff’s chamber appeal against the deletion of the broker was dismissed, and the associated application for condonation of delay was disposed of.

The suit itself was not dismissed in this judgment: the plaintiff was directed to address further arguments on the agreement’s stamping and on why the suit should not be dismissed, with the matter listed before the Roster Bench.