In Brief
A landowner agreed to sell approximately 77 acres for Rs. 4.45 crores. The buyer paid an advance of Rs. 50 lakhs. The buyer later discovered the property was subject to a substantial undisclosed bank mortgage (equitable mortgage), contradicting the contract's assurance that the land was free from encumbrances. The seller initially promised remedies and later reduced the sale price by Rs. 35 lakhs. When the buyer withheld further payment, the seller sued for damages, claiming he lost Rs. 77.50 lakhs from a forced resale. The Supreme Court held that the seller's non-disclosure of the material encumbrance amounted to actionable fraud, entitling the buyer to a refund. The High Court had relied on an isolated cross-examination admission suggesting the buyer knew of the mortgage before meeting the seller, which was logically impossible and thus unreliable. The Court restored the trial court's decree for refund of Rs. 65.43 lakhs with interest, finding no valid set-off.
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