Oral Agreement for Sale Inferred from Possession is Unenforceable if Conduct and Correspondence Manifestly Contradict a Concluded Contract

The Appellant (Plaintiff) filed a suit for specific performance of an alleged oral Agreement to Sell dated 08.01.1984 regarding a property in Vasant Vihar, New Delhi

The property was owned by Respondent No. 1 and her late husband, who migrated to Australia in 1971

The Appellant, a relative, managed the property under a General Power of Attorney (GPA) from 1979

He claimed to have paid ₹4,00,000 as part consideration for a total sale price of ₹20,00,000, asserting that formal documents were to be executed once tenants were evicted

Tenants were evicted in 1987, but no sale deed was executed

Instead, the property was leased to the Appellant’s wife’s firm

Correspondence in 1999-2000 showed the parties exploring a "Gift Deed" route to save taxes, which failed due to DDA objections

Following the husband's death in 2017, the Respondents sought eviction of the Appellant's family

The Appellant filed the present suit in 2023

The Trial Court rejected the plaint under Order VII Rule 11 CPC as barred by limitation and lacking a cause of action

1. Whether the Plaint disclosed a valid cause of action regarding the existence of a concluded Oral Agreement to Sell dated 08.01.1984?

2. Whether the suit for specific performance was barred by limitation under Article 54 of the Limitation Act, 1963?

The court applied Order VII Rule 11 of the CPC, which mandates the rejection of a plaint that fails to disclose a cause of action or is barred by law

It relied on Article 54 of the Limitation Act, 1963, stating the limitation for specific performance is three years from the date fixed for performance, or if no date is fixed, when the plaintiff has notice that performance is refused

Regarding oral agreements, it followed the principle that "clever drafting" cannot create an illusion of a cause of action

It further applied the equitable principles from Saradamani Kandappan v. S. Rajalakshmi, holding that specific performance must be sought within a reasonable time, especially regarding urban property value escalation

Sections 91 and 92 of the Indian Evidence Act were noted regarding the impermissibility of oral evidence contradicting written documents (tenancy/GPA)

The Court found the Appellant’s claim of an oral agreement unsubstantiated and contradicted by the parties' conduct. There was zero documentary evidence of the ₹4,00,000 payment

The Appellant’s family continued to occupy the premises as "tenants" and sought "no-objection certificates" from the owners as late as 2013, which is antithetical to a claim of ownership under a 1984 agreement

The 1999 legal advice regarding a "Gift Deed" suggested an entirely different mode of transfer, implying that the alleged 1984 oral sale agreement—if it ever existed—had been abandoned

On limitation, the Court reasoned that if the performance was contingent on tenant eviction (achieved in 1987), the suit filed in 2023 was nearly 36 years late

The Court rejected the argument that "refusal" only occurred in 2022, noting that the Respondents had already filed an eviction suit against the Appellant's family in 2019

Furthermore, the suit was "hopelessly barred by limitation" under Article 54, as the causes of action arose in 1987 or at the latest when the parties shifted to pursuing Gift Deeds in 1999

The suit was also found inequitable due to the four-decade delay. The judgment and order dated 28.09.2024 were affirmed.