On January 5, a Supreme Court division bench led by Justices MR Shah and BV Nagarathna observed that no adverse inference can be drawn against a party on whether he is ready and willing to perform his side of an agreement to buy property simply because he did not produce his passbook. The Court clarified that such negative inferences cannot be drawn unless the failure to produce the passbook occurred despite a Court direction or a prayer by the opposing party for the production of the passbook.

"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 also stated that unless the appellant was summoned to produce his passbook by the opposing party or on the Court's order, no adverse inference can be drawn against him for failing to produce 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.

As a result, the Court granted the appeal and reversed the Karnataka High Court decision.

A division bench was hearing an appeal involving a contested property sale agreement.

The appellant sought to have the agreement in question enforced before the Supreme Court. The respondent, on the other hand, claimed that the agreement had not been executed and that the appellant had not been ready or willing to carry out the sale. The trial court had previously issued a specific performance decree in favour of the appellant. The Karnataka High Court, however, overturned the trial court's decision on the grounds that the appellant had failed to demonstrate that he had sufficient funds or means to pay the balance of the sale consideration for the property. The High Court reached this conclusion in light of the fact that the appellant had not produced his passbook.

Case Title: Basavaraj v. Padmavathi and Another
Citation: CIVIL APPEAL NOS. 8962-8963 OF 2022

Link: https://main.sci.gov.in/supremecourt/2022/7441/7441_2022_4_1506_40734_Judgement_05-Jan-2023.pdf