SUPREME COURT CRITICIZES THE PRACTICE OF SECURING SIGNATURES ON BLANK PAPERS FOR AGREEMENTS, DEEMING IT A BLATANT ACT OF FRAUD AND MANIPULATION

A Division-Bench of the Supreme Court comprising of Justice Pamidighantam Sri Narasimha and Sandeep Mehta passed a Judgement dated 27-09-2024 in the matter of Lakha Singh vs. Balwinder Singh & Anr. Special Leave Petition (Civil) No(s). 30250 of 2018 and held that the large blank spaces on the first and second pages of the disputed Agreement, along with the absence of thumb impressions or signatures of the Parties and attesting witnesses on these pages, strongly suggest that the Agreement was written on a blank stamp paper where the Appellant-Defendant’s thumb impression had already been taken.

FACTS:

1)  That the aforesaid Appeal filed before the Supreme Court by one Lakha Singh (Appellant/Defendant) against one Balwinder Singh and the State Bank of Patiala (Respondents/Plaintiffs), challenged the impugned Judgment dated 25.04.2018 of the High Court of Punjab and Haryana (High Court) whereby, the Court dismissed the Appeal No. RSA No. 4577 of 2017(O&M). Further, the High Court affirmed the Judgment dated 20.03.2017 passed by the learned Additional District Judge, Tarn Taran (First Appellate Court) in Civil Appeal No. 05 of 2016.

2) However, the First Appellate Court dismissed the Appeal filed by the Appellant-Defendant and upheld the Judgment and decree issued on 02.2013, by the Additional Civil Judge (Senior Division), Patti, Tarn Taran (Trial Court), in the Civil Suit brought by the Respondent-Plaintiff. The Trial Court had partially allowed the Suit, Ordering the Appellant-Defendant to pay Rs. 16,00,000/- along with accrued interest as an alternative relief, while rejecting the Respondent-Plaintiff’s request for specific performance of the Agreement.

3) The Respondent-Plaintiff, Balwinder Singh, filed a Suit seeking Specific Performance of an Agreement to sell dated 07.05.2007, for 30 Kanals and 8 Marlas of agricultural land from the Appellant-Defendant, Lakha Singh. The Respondent also requested a permanent injunction to prevent the Appellant from alienating the property or dispossessing him from it. Alternatively, he sought the recovery of Rs. 19,00,000, including Rs. 16,00,000 as earnest money and Rs. 3,00,000 as damages.

4) The Appellant, Lakha Singh, denied executing the Agreement, claiming that it was a result of misrepresentation and fraud. He argued that the Respondent-Plaintiff and his brother, a commission agent, had taken his thumb impression on a blank stamp paper and later filled it out fraudulently.

5) The Trial Court partially allowed the Respondent’s claim, Ordering the Appellant to repay Rs. 16,00,000/- with interest but denying specific performance of the Agreement. The Court found that the transaction resembled a loan rather than a sale of land.

6) The First Appellate Court and the High Court of Punjab and Haryana upheld the Trial Court’s Judgment, dismissing the Appellant’s Appeal. The Appellant then appealed to the Supreme Court.

TRIAL COURT:

The Trial Court observed that while the Respondent-Plaintiff, Balwinder Singh, had produced an Agreement to sell the disputed land, the evidence surrounding the transaction raised doubts about its authenticity. The Court noted that although the Agreement mentioned the transfer of possession of the land, the Respondent admitted that the possession was not handed over. Additionally, the Court found it unusual that the Agreement fixed the date for the execution of the sale deed 16 months after the payment of Rs. 16,00,000/- as earnest money, which seemed inconsistent with the behaviour expected in a normal property transaction.

The Trial Court also concluded that the transaction appeared to be a loan rather than an actual sale of land. The evidence, including the fact that the possession of the land was not transferred and the Agreement was signed on blank stamp papers, supported this conclusion. The Court, therefore, denied the Respondent-Plaintiff’s request for specific performance of the Agreement but ruled that he was entitled to recover the earnest money of Rs. 16,00,000/- with interest from the Appellant-Defendant.

 

HIGH COURT:

The Punjab and Haryana High Court, in its Judgment dated 25.04.2018, upheld the findings of the Trial Court regarding the nature of the disputed Agreement and the evidence presented by the Parties. The High Court agreed with the conclusion that the transaction between the Appellant-Defendant, Lakha Singh, and the Respondent-Plaintiff, Balwinder Singh, appeared to be a loan rather than a genuine sale of agricultural land. The Court found that the evidence provided by the Respondent, including the testimony of the witnesses and the disputed Agreement itself, failed to establish the Respondent’s claim for specific performance of the Agreement. It also noted that the possession of the land was never actually handed over, despite being mentioned in the Agreement.

The High Court further observed that the Trial Courts had properly evaluated the evidence, including the discrepancies in the Agreement and the non-delivery of possession. It found that the Respondent-Plaintiff had not made any efforts during the extended period to seek possession or complete the sale, casting doubt on his intentions. The Court also upheld the Trial Court’s Order directing the return of the earnest money of Rs. 16,00,000/- to the Respondent, along with interest, rejecting the Appellant’s contention that the Agreement was entirely fraudulent. The High Court’s Judgment thus affirmed the denial of specific performance while maintaining the direction for the refund of the earnest money.

 

SUPREME COURT:

Aggrieved by the Order dated 25.04.2018 of the High Court, the Appellant filed Special Leave Petition 30250 / 2018 before the Hon’ble Supreme Court, which was filed on 19.07.2018. The Apex Court, vide Order dated 27.09.2024, made the following observations:

ISSUES:

a) Whether the Agreement to Sell, dated 07.05.2007, between the Appellant-Defendant, Lakha Singh, and the Respondent-Plaintiff, Balwinder Singh, was valid and enforceable, or whether it was a fraudulent document created after taking Lakha Singh’s thumb impression on a blank stamp paper.

b) Whether the Respondent-Plaintiff was entitled to specific performance of the Sale Agreement, i.e., whether he could compel the Appellant to execute the sale deed for the land in question based on the Agreement.

c)Whether the possession of the land was handed over to the Respondent-Plaintiff as claimed, and whether the earnest money of Rs. 16,00,000/- had been genuinely paid to the Appellant-Defendant or if the transaction was a loan, as the Trial Courts had suggested.

 

OBSERVATIONS:

The Court noted that the disputed Agreement to Sell, dated 07.05.2007, was fraught with suspicious elements. It highlighted that the first two pages of the Agreement contained large blank spaces and lacked signatures or thumb impressions of the Parties or the Witnesses. Only the last page bore the thumb impression of the Appellant-Defendant, Lakha Singh, reinforcing the Appellant’s claim that his thumb impression was taken on a blank stamp paper, which was later used fraudulently to create the Agreement.

Secondly, the Court observed that the Respondent-Plaintiff, Balwinder Singh, being a police officer, was required to obtain permission from his department before entering into a high-value property transaction. However, the Respondent failed to do so. Furthermore, the agreed-upon price of Rs. 5,00,000/- per Killa was significantly lower than the market rate, which was admitted to be around Rs. 9,00,000 to Rs. 10,00,000 per Killa. The Court questioned why the Respondent-Plaintiff would agree to such terms, raising doubts about the authenticity of the transaction.

The Court also emphasized that the Respondent-Plaintiff failed to make any efforts during the 16-month period between the execution of the Agreement and the stipulated date for executing the Sale Deed. He did not contact the Appellant-Defendant to arrange the sale and merely appeared at the Sub-Registrar’s office on the scheduled date, claiming readiness to complete the transaction. The Court found it unusual that the Respondent would defer the execution of the sale deed for over a year and four months while allegedly having paid a substantial amount of Rs. 16,00,000/- in earnest money.

CONCLUSION:

Based on the aforementioned facts, the Supreme Court concluded that the entire case presented by the Respondent-Plaintiff was likely a fabrication. The Court observed that the evidence, including the Agreement itself, pointed towards fraud and concoction. Consequently, it overturned the decisions of the Trial Courts, holding that the Judgments were based on a misreading of material evidence. The Supreme Court allowed the Appeal, quashed the previous Judgments, and set aside the decree against the Appellant-Defendant.

 

 

Adv Sakshi Raghuvanshi

Senior Legal Associate

The Indian Lawyer