Specific Performance: Supreme Court holds no adverse inference can be drawn merely for not producing passbook

The Supreme Court recently observed that no adverse inference can generally be drawn against a party on whether he is ready and willing to perform his side of an agreement to buy property merely for not producing his passbook [Basavaraj v. Padmavathi and Another]..The Court clarified that such adverse inferences cannot be drawn unless the failure to produce the passbook was despite a direction by the Court or a prayer by the opposing party for the production of the passbook. .A division bench of Justices MR Shah and BV Nagarathna was hearing an appeal involving a contested agreement to sell property. .The appellant before the Supreme Court sought to enforce the the agreement in question. On the other hand, the respondent alleged that the agreement had not been executed and further that the appellant had not been ready or willing to carry out the sale. The trial court had earlier issued a decree of specific performance in favor of the appellant. .However, the Karnataka High Court reversed the trial court's order on the ground that the appellant had not proved that he had sufficient funds or means to pay the balance sale consideration for the property sale. Pertinently, the High Court arrived at this finding in view of the fact that the appellant had not produced his passbook. .Before the top Court, the counsel for the appellant relied, inter alia, on the cases of Indira Kaur and Others v. Sheo Lal Kapoor and Ramrati Kuer Vs. Dwarika Prasad Singh to argue that no adverse inference can be drawn against the appellant as to whether he had the means to pay the balance consideration on the grounds of non-production of passbook, accounts or other documentary evidence..Accepting the contentions raised by the appellant, the Supreme Court observed:"In the case of Indira Kaur (supra) this Court after considering the observations made by this Court in the case of Ramrati Kuer (supra) has set aside the findings recorded by three courts below whereby an adverse inference had been drawn against the plaintiff therein for not producing the passbook and thereby holding that the plaintiff was not ready and willing to perform his part of the agreement.".The Court noted further that unless the appellant was called upon to produce the passbook either by the opposing party or on the Court's order, no adverse inference can be drawn against him for non-production of his passbook.."It is observed and held that unless the plaintiff was called upon to produce the passbook either by the defendant or, the Court orders him to do so, no adverse inference can be drawn...no adverse inference could have been drawn by the High Court. The High Court seriously erred in reversing the findings recorded by the learned Trial Court on the readiness and willingness of the appellant," the judgment stated. .The Court, therefore, allowed the appeal and set aside the Karnataka High Court decision..[Read Judgment]