While accepting that non-payment of the entire sale consideration may not, by itself, constitute a ground for cancellation of a sale deed, the Delhi High Court found that the very execution of the sale deed was vitiated by coercion, misrepresentation, and undue influence. The Court held that although a sale deed ordinarily results in the transfer of title, if it is established that its execution was not the product of free consent, the document can be rendered void and consequently liable to cancellation.
Further, finding that the primary relief sought in the suit is the cancellation of a registered sale deed, and the authority to annul or set aside such a conveyance does not vest in the DRT, the Court referred to a decision of the Apex Court in the case of Central Bank of India vs Prabha Jain [(2025) 4 SCC 38], where it was categorically held that the DRT lacks jurisdiction to adjudicate claims seeking cancellation of registered sale deeds, and such relief can only be granted by a civil court.
The Division Bench comprising Justice Anil Kshetarpal and Justice Harish Vaidyanathan Shankar observed that the absence of an FIR or criminal proceedings shall not negate the appellant’s plea of coercion or misrepresentation, as allegations regarding threats to kidnap minor children, to compel the appellant to execute the sale deed, if proved, directly undermine the existence of “free consent,” which is an essential requirement for a valid contract under Section 10 read with Section 14 of the Indian Contract Act, 1872.
The Bench further observed that the absence of specific particulars of fraud as required under Order VI Rule 4 CPC is not enough, when the reading of the plaint shows that the term “fraud” is used in conjunction with allegations of coercion and misrepresentation. The appellant’s case is not one of fraud simpliciter but one involving coercion, undue influence, and misrepresentation. Even assuming that the particulars of fraud are not elaborately set out, such a deficiency cannot justify rejection of the plaint under Order VII Rule 11 CPC, as any lack of detail can be cured through amendment or clarified during the course of evidence.
The Bench referred to the Proviso to Order VII Rule 11 CPC, which lays down the specific and exhaustive circumstances under which a plaint may be rejected, and clarifies that any extension of time for valuation correction or stamp duty compliance may be granted only upon the Court being satisfied that exceptional circumstances prevented timely compliance and that refusal to extend time would result in grave injustice.
Accordingly, the Bench stated that the appellant’s failure to lodge an FIR or initiate criminal proceedings cannot, by itself, justify rejection of the plaint. The appellant has categorically asserted that the sale deed executed in favour of the first respondent was not a voluntary act but was obtained through coercion, threats, and misrepresentation. Further, the appellant specifically pleaded that the second respondent had represented that the sale deed would operate merely as a temporary security for the friendly loan extended to the appellant and that it would be cancelled or re-executed in the appellant’s favour upon repayment of the loan amount.
The Bench went on to explain that Sections 91 and 92 of the Indian Evidence Act govern the admissibility of oral evidence for contradicting the terms of a written document, but their applicability arises only at the stage of leading evidence. When dealing with an application under Order VII Rule 11 CPC, the Court is not required to examine issues of admissibility or evidentiary bar; its inquiry is confined to whether the plaint, on its face, discloses a cause of action and whether the suit is barred by law. Accordingly, the Bench restored the suit to its original number to be proceeded in accordance with the law.
Briefly, as the sanctioned amount of the loan was not disbursed in time for the appellant and his father to purchase the suit property, the appellant sought temporary financial assistance from the second respondent for his proposed business venture. The same was agreed for a friendly loan of Rs. 65 lacs with a monthly interest at 2.25% per month. A MoU was executed between the parties, under which the appellant agreed to hand over the original title documents of the suit property upon receiving the loan amount.
When a part amount of Rs. 25 lacs was transferred by the respondent, the appellant handed over the original title documents. Later, the appellant’s mother and sisters executed a Relinquishment Deed formally relinquishing their respective shares in the suit property in favour of the appellant. Thereafter, the respondent transferred an additional sum of Rs. 25 lacs and asked him to transfer the same in the name of a firm owned by the respondent. The appellant alleged this to be obtained on coercion and threats to kidnap his children, which later on culminated in the execution of a sale deed in their favour.
Appearances:
Advocates Manish Makhija and Simran Makhija, for the Appellant
Advocate O. P. Pahuja, for the Respondent
