Withdrawal Liberty Cannot Cure Order II Rule 2 Bar to Later Specific Performance Suit; Oral Land Sale Agreement Requires Strict Proof: Supreme Court

Case Name: Bombay Garage Ahmedabad Limited & Ors. v. J P Iscon Private Ltd. & Anr.

Date of Judgment: 29 September 2026.

Citation: 2026 INSC 1066.

Bench: Justices J. B. Pardiwala and K. Vinod Chandran.

Held: The Supreme Court held that where specific performance was already available on the cause of action pleaded in an earlier injunction suit, omission of that relief without obtaining leave under Order II Rule 2 CPC bars a subsequent suit seeking it. Liberty sought when withdrawing the earlier suit does not cure the failure to reserve the omitted relief when instituting that suit. The Court further reaffirmed that an oral agreement for sale of immovable property can be specifically enforced, but the plaintiff bears a heavy burden of proving a concluded contract and agreement on its essential terms. Neither evasive defence testimony nor the political stature of a plaintiff’s witness can substitute for that proof.

Summary: The dispute concerned an alleged oral agreement for sale of property belonging to Bombay Garage Ahmedabad Limited. The plaintiffs claimed that negotiations culminated in an agreement for a consideration of ₹20.50 crore, supported by cash advances and delivery of a ₹5 crore cheque. The Trial Court decreed specific performance, and the High Court affirmed that decree.

Before instituting the specific performance suit, however, the plaintiffs had filed a suit seeking only a permanent injunction against alienation, changes to the property and construction. The earlier plaint expressly alleged that the defendants had refused to honour the agreement on 8 May 2007 and threatened to sell the property for a higher price. The plaintiffs subsequently withdrew that suit, referring to settlement discussions and seeking liberty to institute a fresh suit.

The Supreme Court found that the pleaded refusal had already furnished a complete cause of action for specific performance when the injunction suit was filed. Since the plaintiffs neither claimed that relief nor obtained leave to reserve it, the subsequent suit attracted the bar under Order II Rule 2. The possibility that the first suit could have been amended did not assist the plaintiffs because no such amendment was pursued.

Distinguishing the two procedural provisions, the Court explained that permission to withdraw and institute a fresh suit under Order XXIII Rule 1(3) does not preserve an additional relief already omitted contrary to Order II Rule 2. The decisive inquiry is whether that relief was available on the same cause of action when the earlier suit was instituted. The Court also clarified that the earlier plaint could be examined even though it had been produced by the plaintiffs themselves.

Independently examining the merits, the Court found that the alleged oral contract had not been established. The successive plaints and later amendments contained inconsistencies concerning the number and sequence of meetings, the participants and the alleged advance payments. The plaintiffs also failed to plead the meeting at the residence of a prominent political functionary on whose testimony they substantially relied.

Rejecting the argument that this witness’s public stature enhanced the evidentiary value of his testimony, the Court held that political status carries no presumption of truthfulness before a court. His account of another person’s alleged acceptance over the telephone was also found to be hearsay in the circumstances.

The Court further noted that there was no evidence that the ₹5 crore cheque allegedly delivered as an advance had been presented or encashed. A letter transmitting property documents did not establish acceptance of a concluded sale agreement. Nor did the matrimonial relationship between a negotiating intermediary and a person associated with the defendant company confer authority on the intermediary to contract for the company’s assets.

The Trial Court’s reliance on evasive answers by defence witnesses was equally misplaced. Weaknesses in the defence could not establish a contract that the plaintiffs themselves had failed to prove unequivocally. Describing the concurrent findings as perverse, the Supreme Court held that both maintainability and proof of the alleged agreement were lacking.

The Court also declined to order repayment of the alleged cash advance because its payment had not been established. It left undecided the authority of the ninth defendant to deal with the company’s assets, finding that issue unnecessary in view of its conclusions.

Decision: The Supreme Court allowed the appeal, set aside the Trial Court’s decree and the High Court’s judgment, and dismissed the suit for specific performance.