Court holds that disputed facts in agreement of sale require trial; plaint cannot be rejected under Order 7 Rule 11 CPC merely on disputed facts; Plaintiff directed to deposit balance sale consideration to demonstrate bona fides
In a significant judgment dated November 3, 2026, the Division Bench of the Andhra Pradesh High Court, comprising Justices D. Ramesh and Alapati Giridhar, allowed three appeals filed by the plaintiff, Perumalla Kasi Rao, against the decree and order of the VI Additional District Judge, Markapur. The trial court had earlier rejected the plaint under Order 7 Rule 11 of the Code of Civil Procedure (CPC) in a suit for specific performance based on an agreement of sale dated January 6, 2010.
The plaintiff had filed a suit seeking specific performance of an agreement executed by the first defendant, Nukala Muralikrishna, purportedly on behalf of herself and defendants 2 to 4, for the sale of a 47.50-acre property in Narasimhapuram and Markapur villages for Rs. 2.38 crores. The agreement contained essential terms such as the date, extent of land, sale consideration, timelines for payments, and registration. The plaintiff had paid an earnest money advance of Rs. 5 lakhs and was ready and willing to perform his part of the contract by offering to deposit the balance sale consideration.
The defendants challenged the plaint, contending that the agreement was only an agreement to enter into another agreement, which is not enforceable, and that the first defendant lacked authority to bind the others. They further argued that the agreement lacked essential details such as the names of vendors and vendees and a proper schedule, and that it was inadmissible as it was on plain paper without stamp duty compliance.
However, the High Court emphasized that the trial court erred in rejecting the plaint without a trial, as disputed facts and issues of authorization, enforceability, and compliance with terms of the agreement require evidence and adjudication at trial. The Court noted that the agreement contained all essential terms to constitute a sale contract and that the defendants did not deny the execution of the agreement or the receipt of the advance payment. The Court also held that the proviso to Section 92 of the Indian Evidence Act permits evidence on issues such as capacity to contract and the subsistence of oral agreements, which are matters for trial.
The Court referred to several Supreme Court precedents, including T. Arivandandam v. T.V. Satyapal, Aloka Bose v. Parmatma Devi, and Kollipara Sriramulu v. T. Aswatha Narayana, underscoring that a plaint cannot be rejected merely on disputed facts requiring trial and evidence. The Court also directed the plaintiff to deposit the balance sale consideration amount of Rs. 2.28 crores by way of fixed deposits within 10 days to demonstrate readiness and willingness to perform the contract. Failure to do so would entitle the defendants to seek permission to alienate the property under Section 52 of the Transfer of Property Act.
The High Court set aside the trial court's order rejecting the plaint and remanded the matter for trial, directing the trial court to dispose of the suit expeditiously, preferably within six months from receipt of the judgment. The Court further warned that any party protracting the suit or not assisting the court could face costs or other appropriate orders.
This judgment reiterates the principle that courts should not summarily reject plaints in suits for specific performance on the ground of disputed facts or technicalities if the agreement contains essential terms. It safeguards the right of parties to have their disputes adjudicated on merits through trial and evidence, rather than being prematurely dismissed.
Bottom Line:
A plaint cannot be rejected under Order 7, Rule 11 of the Civil Procedure Code (CPC) merely on the basis of disputed facts that require trial and evidence for adjudication. An agreement containing essential terms for the sale of immovable property, even if contested, merits trial and cannot be dismissed at the threshold.
Statutory provision(s): Code of Civil Procedure, 1908 - Order 7 Rule 11; Specific Relief Act, 1963 - Sections 10, 16, 20; Indian Evidence Act, 1872 - Section 92; Transfer of Property Act, 1882 - Section 52
Perumalla Kasi Rao v. Nukala Muralikrishna, (AP)(DB) : Law Finder Doc Id # 3019119
