The Delhi High Court has held that once a registered Sale Deed has been executed between parties specifying a certain sale consideration, a suit for the recovery of any balance amount based on an earlier Agreement to Sell is barred by law. The Court ruled that such a claim is untenable in light of the bar on oral evidence contained under Sections 91 and 92 of the Indian Evidence Act, 1872, and implies a novation of contract under Section 62 of the Indian Contract Act, 1872.
The judgment was delivered by a Single-Judge Bench of Justice Neena Bansal Krishna, which dismissed a Regular First Appeal filed under Section 96 read with Order XLI Rule 1 of the Code of Civil Procedure, 1908 (CPC). The appeal challenged a Trial Court judgment rejecting a recovery suit under Order VII Rule 11 of the CPC.
Factual Background of the Case
The Appellant/Plaintiff, Mr. Narender Kumar Gola, was the absolute owner of a property bearing Plot No. 4, Sector 4, Vaishali, Ghaziabad, Uttar Pradesh (“Suit Property”). On April 14, 2019, he entered into an Agreement to Sell with the Respondents/Defendants, Kishitiz Goel and Nilansh Goel, for a total sale consideration of ₹1,20,00,000/-.
Subsequently, a registered Sale Deed was executed between the parties on September 23, 2019. In the registered Sale Deed, the sale consideration was shown as ₹66,12,000/-. The Plaintiff claimed that the Defendants had “cunningly convinced” him to mention this lower amount in the registered document in order to avoid certain taxes, and that he “could not sense the mala fide and dishonest intention of the Defendants and fell into their trap.”
According to the Plaintiff, the Defendants had already paid a sum of ₹1,09,00,000/- through cash and cheques before the execution of the Sale Deed. At the time of registration, the Defendants issued three post-dated cheques dated September 23, 2019—two for ₹5,00,000/- each and one for ₹1,00,000/-—representing the remaining balance of ₹11,00,000/- from the actual mutually agreed consideration of ₹1.20 crore.
Upon the Defendants’ request, the Plaintiff presented these cheques for encashment after three months. However, the cheques were returned dishonoured vide Return Memos dated December 23, 2019, and December 31, 2019. Despite being apprised of the dishonour, the Defendants delayed payment. The Plaintiff then sent a Legal Notice dated January 3, 2020. The Defendants replied on January 14, 2020, asserting that the mutually agreed sale consideration was ₹66,12,000/-, which stood fully paid.
Consequently, the Plaintiff filed a Suit for Recovery (Suit No. 53/2021) under Order XXXVII of the CPC for ₹11,00,000/-. By a Judgment dated February 22, 2021, and a Decree dated October 30, 2021, the Learned Additional District Judge rejected the suit under Order VII Rule 11 of the CPC. The Trial Court held that the Sale Deed implied a novation of the original Agreement under Section 62 of the Indian Contract Act, and any contention claiming a higher sale consideration was barred by Sections 91 and 92 of the Indian Evidence Act. Aggrieved by this rejection, the Plaintiff preferred the present Regular First Appeal before the Delhi High Court.
Arguments Presented by the Parties
The Appellant/Plaintiff challenged the Trial Court’s decision on the following grounds:
- The Agreement to Sell dated April 14, 2019, clearly indicated that the agreed sale consideration was ₹1,20,00,000/-, and the Respondents had already paid ₹1,09,00,000/- on the date of execution of the Sale Deed.
- If the actual sale consideration was only ₹66,12,000/-, there was no requirement for the Defendants to have paid ₹1,09,00,000/-. This payment itself proved that the actual agreed consideration was ₹1.20 crore, and the three cheques were issued for the balance of ₹11,00,000/-.
- The lower amount of ₹66,12,000/- was entered in the Sale Deed purely to help the Defendants avoid taxes.
- The Plaintiff was not given an opportunity to prove his case or explain the actual sale consideration, and the suit was rejected outright. The bar under Sections 91 and 92 of the Indian Evidence Act, 1872, would only apply at the stage of evidence, and not at the threshold.
- The Trial Court failed to consider that the sale bargain was to be completed within three months (from April 14, 2019, to July 13, 2019), but the Defendants delayed it on various pretexts.
Court’s Analysis and Observations
The High Court perused the records and analyzed the documents executed between the parties. Justice Neena Bansal Krishna observed that while the parties may have initially negotiated for a sale consideration of ₹1,20,00,000/- in the Agreement to Sell, the subsequent registered Sale Deed dated September 23, 2019, specified the total consideration to be ₹66,12,000/-.
The Court upheld the Trial Court’s finding that this change represented a novation of contract, stating:
“In the present case, the Learned District Judge has rightly observed that from the documents executed between the Plaintiff and the Defendants, it was evident that there was a novation of the contract in terms of Section 62 of the Indian Contract Act, 1872 and the final sale consideration as negotiated was Rs.66,12,000/-.”
On the applicability of the Indian Evidence Act, 1872, the Court noted that once the terms of a contract are reduced to writing, oral evidence cannot be admitted to contradict them. The Court observed:
“…the terms of written documents cannot be ignored and overlooked in the light of Sections 91 and 92 of Indian Evidence Act. Section 91 of the Indian Evidence Act, 1872 states that, when the terms of a contract of any other disposition of property, have been reduced to the form of a document, no evidence shall be given in proof of the terms of such contract.”
Referring to Section 92, which excludes oral evidence, the Bench remarked:
“Any evidence that may be led by the Plaintiff, would be contrary to the registered documents and will be barred under Sections 91 and 92 of Indian Evidence Act, 1872.”
To support its findings, the High Court cited two key precedents:
- Om Prakash vs. IOCL Officers Welfare Society and Another (2019 SCC OnLine Del 6719): Wherein it was held that once a registered Sale Deed records that the entire agreed sale consideration has been paid, a Suit for Recovery of any balance sale consideration is barred by Sections 91 and 92 of the Indian Evidence Act.
- Jai Bhagwan vs. Rajesh (2008 Indlaw Delhi 419): Wherein a suit seeking cancellation of a registered Sale Deed on the ground of non-payment of full consideration was dismissed. The court in that case observed that once a party signs a registered Sale Deed, they cannot seek its cancellation on the ground that they had not read its contents.
Furthermore, the Court strongly disapproved of the Plaintiff’s attempt to enforce a transaction structured to evade tax liabilities. Addressing the Plaintiff’s own admission of participating in cash transactions to bypass statutory duties, the Court observed:
“It is also pertinent to note that according to the case of the Plaintiff, there were cash transactions undertaken by the Defendants in order to avoid payment of tax and duty. Once it is shown that the purpose was to avoid the liability under law, the Plaintiff cannot seek redressal in the Court for implementation of the said transactions.”
Decision of the Court
The High Court concluded that the Trial Court had rightly rejected the recovery suit under Order VII Rule 11 of the CPC as it failed to disclose any cause of action. Finding no merit in the appeal, the High Court dismissed the Regular First Appeal along with all pending applications.
Case Details
- Case Title: Narender Kumar Gola v. Kishitiz Goel & Anr.
- Case No.: RFA 472/2022
- Bench: Justice Neena Bansal Krishna
- Date of Judgment: May 18, 2026
