Delhi High Court: In an appeal filed under Section 96, Civil Procedure Code, 1908 (CPC) challenging trial court’s order dated 10 January 2019, whereby the suit filed by the plaintiffs seeking possession, injunction, and mesne profits in respect of suit property was dismissed, a Single Judge Bench of Mini Pushkarna*, J., affirmed impugned order, holding that the appellant failed to prove cancellation of the agreement to sell as the conduct of parties, i.e., accepting the benefits of contract even beyond stipulated timelines, handing over possession, executing an irrevocable General Power of Attorney (GPA), allowing purchasers to deal with tenants, and never demanding balance consideration or initiated any legal action, clearly showed continuation and completion of transaction and created acquiescence against challenge to agreement to sell the suit property.
Factual Matrix
The suit property was originally allotted by the President of India (lessor) to one Shri R.N. Luthra under a perpetual lease in 1961. Upon his death, the property devolved equally among his two daughters and grandson through a probated will. Subsequently, one-third share devolved upon the deceased daughter’s son through a will.
The co-owners, one daughter and 2 grandsons (seller), entered into an agreement to sell dated 24 January 1989 with Respondents 1 to 8 (purchases) for Rs 80.70 lakhs which stated that Rs 10.50 lakhs paid as earnest money, Rs 62.40 lakhs payable within 6 months or upon statutory clearance, balance Rs 7.80 lakhs payable after income tax clearance and possession to be handed over upon part performance.
Thereafter, additional payments of Rs 12 lakhs on 1 August 1989 and Rs 15 lakhs on 3 August 1989 were made. Possession, physical and symbolic, was handed over on 3 August 1989. An irrevocable GPA was executed in favour of Respondent 7.
The purchasers claimed an oral understanding that payments made to tenants for vacating the premises would be adjusted towards sale consideration. Accordingly, Rs 45 lakhs was paid to tenants. Further, Rs 8,23,646.72 was paid towards revocation of re-entry proceedings. Purchasers continued paying statutory dues like lease rent and property tax.
Despite these developments, the suit was filed in 1999, about 11 years after possession and execution of documents, by the heirs of one of the sellers, alleging non-payment of full consideration and cancellation of the agreement.
After two and forth between various courts, the trial court ultimately dismissed the suit, leading to the present appeal.
Issues for Consideration
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Whether the agreement to sell dated 24 January 1989, executed by the sellers in favour of the purchasers, stood cancelled or continued to subsist?
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Whether it had been established that the balance amount towards the sale consideration under the agreement to sell, had not been paid by the purchasers, thereby, entitling the appellant to any relief?
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Validity of the GPA dated 3 August 1989.
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Whether possession of the purchasers was protected even in the absence of a sale deed?
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Whether suit of the appellant for mere possession and mesne profits not maintainable in view of validity of the agreement to sell and GPA and also barred by limitation?
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Whether appellant has approached this Court with unclean hands?
Analysis and Findings
Subsistence of Agreement to Sell dated 24 January 1989
At the outset, the Court examined whether the agreement to sell stood cancelled, as alleged by the appellant, or continued to subsist. It noted that although the stipulated time for payment under Clause 4 had expired, the conduct of the parties unmistakably demonstrated that the agreement was never treated as terminated. Even after expiry of the timeline, the sellers accepted substantial further payments of Rs 12 lakhs and Rs 15 lakhs, acknowledged the same through receipts, and most significantly, handed over possession, both physical and symbolic, of the suit property to the purchasers. Simultaneously, an irrevocable GPA conferring wide powers was also executed.
The Court emphasised that there was no forfeiture of earnest money, no notice of cancellation, and no attempt by any of the original sellers to recover possession or enforce alleged non-payment. On the contrary, subsequent conduct, such as permitting purchasers to deal with tenants, manage the property, and even pay statutory dues, showed that the parties acted upon the agreement as a concluded transaction.
The Court referred to Union of India v. N. Murugesan, (2022) 2 SCC 25, where the Supreme Court held that “acquiescence, whether by words or conduct, is an exception to termination of contract. Additionally, where one knowingly accepts benefits of a contract, he is estopped from denying the validity/binding effect of such contract, as the law does not permit a person to both approbate and reprobate or blow hot and cold”.
The Court found sellers action of parting with possession and conferring sweeping rights with nearly half the consideration remained unpaid, yet not taking any action for 11 years, as “incomprehensible”. It was asserted that the prolonged silence and acceptance of benefits constituted clear acquiescence, thereby negating the plea of cancellation. Thus, it held that the appellant failed to establish any point of cancellation of agreement to sell.
Validity and Effect of Alleged Oral Understanding
On the issue of the alleged oral understanding, whereby payments made to tenants were to be adjusted towards sale consideration, the Court rejected the appellant’s contention that such understanding was impermissible. It held that contractual terms can be modified by subsequent conduct or understanding between parties, and such variation need not always be reduced to writing.
The Court observed that the receipt dated 3 August 1989 itself recorded that the agreement “stands modified to that extent”, thereby indicating that the original contractual arrangement was not static. The evidence led by the respondents regarding payments to tenants remained unrebutted. The Court further noted that the surrounding circumstances, particularly the handing over of possession and execution of GPA, made the existence of such understanding plausible.
Thus, the Court refused to accept the contention that the oral understanding was barred under Sections 91 and 92, Evidence Act, 1872. It clarified that these provisions exclude oral evidence only when it contradicts written terms, not when it explains or supplements them in light of subsequent conduct.
The Court reiterated the settled principle of law that “Courts in a civil trial apply a standard of proof governed by preponderance of probabilities,” and this proof of a fact depends on the probability of its existence. After weighing the various probabilities concerning a fact situation, the Court then would come to a conclusion as regards preponderance in favour of existence of a particular fact.
Further, the Court referred to Chowdamma v. Venkatappa, 2025 SCC OnLine SC 1814, where it was held that “where a party to the suit does not appear in the witness-box and states his own case on oath and does not offer himself to be cross-examined by the other side, a presumption would arise that the case set up by him is not correct”.
Considering the oral and documentary evidence on record and by applying the standard of preponderance of probabilities, the Court opined that the purchasers have “proved” that there existed an oral understanding between the sellers and the purchasers.
Thus, the appellant had failed to establish that full payment has not been received by the sellers, in terms of the agreement to sell between the sellers and the purchasers.
Validity of GPA dated 3 August 1989
The Court noted that no objection to the validity of the GPA was raised before the trial court, nor was there any allegation that the said document had been obtained by fraud, coercion, or undue influence. On the contrary, the GPA dated 3 August 1989 stood duly admitted in evidence without dispute, thereby lending it prima facie legitimacy.
Relying on M.S. Ananthamurthy v. J. Manjula, (2025) 10 SCC 596, the Court reiterated that a power of attorney is essentially a contract of agency, governed by Chapter X, Contract Act, 1872 where the executant is the principal and the holder acts as an agent. Such authority is ordinarily revocable under Section 201, Contract Act. However, an important exception is carved out under Section 202, which provides that where the agent has an interest in the subject-matter of the agency, the authority becomes irrevocable and cannot be terminated to the prejudice of such interest.
Applying the principle of agency to the present case, the Court found that the GPA dated 3 August 1989 was executed in the backdrop of an ongoing transaction for sale of the suit property, pursuant to the agreement to sell dated 24 January 1989. The GPA was executed contemporaneously as part of the same transaction and against valuable consideration.
The Court also took note of the appellant’s own admission in her evidence affidavit that the GPA was executed to facilitate handing over of possession in terms of the agreement to sell. Therefore, the GPA was not an isolated or gratuitous instrument but was intrinsically linked to the transfer of possessory rights in favour of the purchasers. The Court held the GPA to be “clearly coupled with interest” and therefore irrevocable in nature.
The Court held that the GPA dated 3 August 1989 was validly executed and proved, formed part of a composite transaction of sale, was supported by consideration and transfer of possession, created and secured an interest in favour of the purchasers, and therefore constituted an irrevocable agency under Section 202, Contract Act. Accordingly, the challenge to its validity and the plea that it stood extinguished upon the death of the executant were rejected.
Possession of purchasers protected even in absence of Sale Deed
The Court noted that it was undisputed that possession had been handed over in part performance, the purchasers had acted upon the contract, they had paid substantial consideration and incurred expenses and remained in uninterrupted possession since 1989.
The Court rejected the appellant’s argument that absence of a suit for specific performance disentitled the respondents from invoking Section 53-A and clarified that Section 53-A operates as a shield and does not require institution of a suit.
Further, the Court held the plea that protection under Section 53-A cannot be based on oral understanding to be misconceived, as the foundation remained the written agreement to sell, supplemented by conduct.
The Court held that even in the absence of a registered sale deed, the possession of the purchasers is legally protected, and the plaintiffs cannot dispossess them merely on the ground of lack of formal conveyance. The equitable doctrine embodied in Section 53-A, read with the conduct of the parties, operates as a complete bar against the plaintiffs’ claim.
Limitation and Maintainability of the Suit
The Court reiterated the settled principle of law that the true nature of the relief must be gathered from the substance of the pleadings and not merely from the form in which it is couched. In the instant matter, the appellant sought to portray the action as a simpliciter suit for possession based on title; however, the Court found that such framing was wholly misconceived in light of the subsisting agreement to sell and the irrevocable GPA, both of which had been acted upon and remained unchallenged within limitation.
On limitation, the Court found the suit to be clearly belated and noted that the cause of action, if any, arose in 1989—1990, yet the suit was filed only in 1999, and further no explanation for the delay was provided. The Court held that the plaintiffs cannot bypass limitation by framing the suit as one for possession based on title, when in substance it required challenge to the agreement to sell and GPA.
The Court asserted that since no relief for cancellation of these documents was sought, the suit was fundamentally defective. Once execution of documents and delivery of possession were admitted, relief of possession could not be granted without first setting aside those instruments.
The Court emphasised that once the principal relief is barred by limitation, any consequential relief, such as possession or mesne profits, must also fail. It observed that the appellant cannot be permitted to evade the bar of limitation by adopting “clever drafting” and presenting the suit as one for possession, injunction and mesne profits. The Court categorically held that “what cannot be done directly, cannot be allowed to be done indirectly”, thereby rejecting the attempt to bypass limitation through form rather than substance.
The Court affirmed that the agreement to sell and GPA remained valid and operative, the respondents’ possession was protected in law and the appellant’s claim for possession necessarily required cancellation of these instruments. Thus, the Court held the suit to be barred both by limitation and by its defective framing.
Accordingly, the Court found no infirmity in the trial court’s conclusion that the suit was barred by limitation and that the reliefs of possession and mesne profits could not be granted.
Overall Conduct of Parties
The Court placed decisive reliance on the conduct of the original sellers and noted that they accepted payments beyond stipulated timelines, handed over possession, executed an irrevocable GPA, allowed purchasers to deal with tenants and authorities, and never demanded balance consideration or initiated any legal action. Even the appellant admitted that her mother took no action during her lifetime. No documentary evidence was produced to show any demand for balance consideration or cancellation of the agreement.
The Court held that such conduct clearly amounted to acquiescence and affirmation of the contract, invoking the principle that a party cannot “approbate and reprobate”. Once benefits of a transaction are accepted, it is not open to later challenge its validity.
Decision
The Court held that there was no error in the trial court’s findings. It affirmed the dismissal of the suit and rejected the appellant’s challenge in entirety.
Also Read: Agreement to Sell, Power of Attorney and Will: Supreme Court Reiterates Limits on Transfer of Title
[Sunita Sinha v. Leela Builders (P) Ltd., RFA 70/2019, CM APPL. 3892/2019, CM APPL. 34117/2019 & CM APPL. 46747/2023, decided on 17-4-2026]
*Order by *Judgment by Justice Mini Pushkarna
Advocates who appeared in this case:
Mr. Anirudh Bakhru, Mr. Ayush Puri, Mr. Kanav Madnani, Ms. Urvija Sharma, Ms. Aayomi Sharma, Mr. Sultan Jafri, Mr. Mohd. Umar and Mr. Abhigyan Pandey, Advs., Counsel for the Appellant
Mr. Samar Singh Kachwaha, Ms. Aakanksha Kaul, Ms. Kavita Vinayak and Mr. Gaurav Vashisth, Advs., Counsel for the Respondents 1 to 8
Mr. Lakshay Dhamija, Adv for R-9 Mr. Arpit Bhargava, Mr. Sarthak Sharma, Mr. Abhishek Gaind, Mr. Ajay Singh Gosain, Ms. Astha Sharma and Ms. Nitasha Gupta, Advs., Counsel for the Respondent 10
Mr. Manoj Pant, Adv., Counsel for the Respondent 11