Specific Performance Suit | Plaintiff Need Not Seek Cancellation Of Subsequent Sale Deed Executed With Prior Knowledge Of Agreement To Sell : Supreme Court

When a vendor is under a contractual obligation to transfer the suit property to the plaintiff, and transfers the suit property to a third person, then the plaintiff while filing a suit for specific performance of contract need not be required to plead for cancellation of the sale made in favor of the third person by the vendor if the property was purchased without bonafides and with notice of the agreement to sell, observed the Supreme Court.

The Court said that a suit for specific performance of the contract would be enforceable against the third person (subsequent transferee), who had purchased the suit property, despite knowing that the sale of the suit's property was to be executed in favor of the plaintiff.

In other words, the subsequent transferee (third person) would be directed to transfer the suit property to the plaintiff, and there would be no requirement for the plaintiff to plead for a cancellation of the subsequent sale in the suit for specific performance of the contract filed against the vendor.

In the present case, the vendor was under an obligation to transfer the suit property to the plaintiff, however instead of transferring the suit property to the plaintiff, he sold the suit property to the third person (subsequent transferee).

The plaintiff had filed a suit for specific performance of the contract against the vendor to transfer the suit property to the plaintiff. However, the claim of the plaintiff was countered by the subsequent transferees (defendants) on the ground that there was no prayer made in the specific performance suit for the cancellation transfer made in favor of the defendants by the vendor.

Rejecting the Appellant/defendant's argument, the bench comprising Justices Abhay S Oka and Sanjay Karol upon placing reliance on the Judgment of Lala Durga Prasad & Ors. v. Lala Deep Chand & Ors. reported in (1953) 2 SCC 509, observed that a plaintiff's suit for specific performance of a contract would be enforceable against the defendants and they are bound to pass on the title which resides in them to the plaintiff.

Since the defendants were not the bona fide purchasers and had knowledge of the contract between the plaintiff and vendor about the sale of the suit property to the plaintiff by the vendor, the Judgment authored by Justice Abhay S Oka observed that the subsequent purchasers cannot ask the plaintiff to plead for cancellation of the subsequent sale deeds and would be directed to execute the sale deed along with the original vendor in favor of the plaintiff.

“When, in a given case, the defendants, who are subsequent purchasers, fail to prove that they entered into the sale deed in good faith and without notice of the suit agreement, in view of Section 19(b), a decree for specific performance can be passed against such defendants. Therefore, in such a case where Section 19(b) is applicable, under the decree of specific performance, the subsequent purchasers can be directed to execute the sale deed along with the original vendor. There is no necessity to pray for the cancellation of the subsequent sale deeds.”, the Court observed.

Section 19 of the Specific Relief Act, 1963 (“SRA”) states that the relief of specific performance of the contract may be enforceable against parties and persons claiming under them by subsequent title. Sub-clause (b) of Section 19 puts two conditions under which the specific performance may be enforceable against a person i.e., when a transferee acquiring a subsequent title has not paid money in good faith and has acquired the property having notice of the original contract.

After finding that the conditions stipulated under Section 19(b) of the SRA were not followed in the present case as the defendants hadn't acquired the title in good faith and had knowledge of the original contract that existed before acquiring the subsequent title, the court held in favor of the plaintiff by directing the defendants to execute the sale deed in favor of the plaintiff.

Counsels For Appellant(s) Mr. Ashok Kumar Sharma, Sr. Adv. Mr. Vanshdeep Dalmia, AOR Ms. Anisha Jain, Adv.

Counsels For Respondent(s) Mr. Sumit Kumar, AOR Mr. Jatinder Kumar Bhatia, AOR Mr. Krishnam Mishra, Adv. Mr. Param Kumar Mishra, Adv.

Case Details: MAHARAJ SINGH & ORS. Versus KARAN SINGH (DEAD) THR. LRS. & ORS.

Citation : 2024 LiveLaw (SC) 473

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