The Supreme Court on March 10, 2026, upheld the dismissal of a suit for specific performance of a 2002 sale agreement, holding that the plaintiff approached the court with “unclean hands” by suppressing a contemporaneous Memorandum of Understanding (MoU) that exposed the transaction as sham security for a loan rather than a genuine sale. A bench of Justices Prashant Kumar Mishra and Prasanna B. Varale dismissed the appeal filed by Muddam Raju Yadav against the High Court of Telangana’s reversal of the trial court’s decree.

The agreement dated June 4, 2002, purportedly covered house property No. 1-91/1 (old No. 1-17/2) on Plot No. 1 admeasuring 406.33 square yards in Survey No. 1, Medchal Village & Mandal, Ranga Reddy District. Yadav claimed he paid ₹6 lakh advance out of ₹13 lakh total consideration and was always ready to pay the balance ₹7 lakh within 11 months. He issued a legal notice on April 25, 2003, after the seller allegedly evaded execution, and filed Civil Suit No. 5-A/1990 seeking declaration and injunction.

The seller (B. Raja Shanker, since deceased, through LRs) defended that the registered agreement was nominal security for a ₹6 lakh hand loan advanced by Yadav (an unlicensed moneylender). A simultaneous MoU (Exhibit B-2) on the same date explicitly recorded this understanding: the seller would repay within 12 months and retrieve title deeds, failing which the property would transfer at market value; until then, Yadav would claim no right, title, or interest. Partial repayments of ₹1 lakh (acknowledged) and ₹1.5 lakh were made, but Yadav suppressed the MoU and issued a contradictory notice.

The Trial Court decreed the suit, finding Yadav ready and willing (supported by bank statements) and the seller in breach. The High Court reversed, holding the MoU proved the agreement sham and non-enforceable, as the seller was not bound by an ex-parte earlier decree obtained against the State alone.

Justice Mishra, authoring the judgment, affirmed:
“In a suit for specific performance, the conduct of the parties is significant… Even a slight doubt in the mind of the Court that the plaintiff was not acting bonafidely and that the material facts, having bearing on the agreement, have been withheld… the equitable and discretionary relief has to be denied. A plaintiff approaching the Court with unclean hands, like in the present case—the plaintiff having withheld the document i.e., MoU (Exhibit B-2)… the present was a fit case for denial of relief of specific performance.”

The Court noted the MoU and no-objection letter by the seller’s sons bore sequential stamp numbers from the same vendor, identical witnesses, and same date—probabilising the loan-security defence. Suppression in the plaint was fatal; even the additional evidence application under Order XLI Rule 27 CPC was meritless, as the MoU was always within Yadav’s knowledge.

The appeal was dismissed with no order as to costs, leaving the High Court’s judgment intact.

Case Title: Muddam Raju Yadav versus B. Raja Shanker (D) Through LRs. & Ors. | Civil Appeal No. 3255 of 2026 (Arising out of SLP (Civil) No. 6453 of 2024) | 2026 INSC 214

Click HERE for full update