Claim Of Title To Property U/S 19 Of Specific Relief Act Must Be Continuing Claim, Running Through Concentric Circles Of Relationships: Telangana HC

The Telangana High Court has held that when enforcement of a contract is sought under section 19 of the Specific Relief Act, the claimant needs to establish a concentric circle of relationships with the contracting parties to the contract.

The order was passed by a Division Bench comprising Justice Moushumi Bhattacharya and Justice M.G. Priyadarshini in an Appeal Suit challenging the dismissal of a suit for specific performance and cancellation of a compromise decree. The Bench reiterated that only parties to a contract or persons claiming rights from parties to a contract can seek specific performance and under no circumstance can the court compel a third party to enter into an agreement with a third party and seek specific relief against the third party.

“Therefore, there is admittedly no privity of contract between respondent Nos.1-5 and respondent No.6 which is essential to Section 19 of the Act. 39. The appellant/plaintiff could only have relied on Section 19 of the Act if the respondent Nos.1-5 had made a claim to the suit schedule properties through the respondent No.6. The above analysis of Section 19 makes it evident that the claim of title to property of which specific performance is sought must be a continuing claim and one that runs through the concentric circles of relationships. In other words, specific performance can be enforced by a party against a party to the contract and thereafter against a non-party who claims title to the property through one of the parties to the contract. The chain of claim to the property in question must hence remain unbroken so as to bind subsequent title-holders to the property save and except bona fide transferees for value and without notice.”

Background:

In 2018, the plaintiff entered into an Agreement of Sale with one of the respondents to purchase the property owned by the respondent for a consideration of 4 crores and an advance payment of 12 lakh rupees. However, even until 2023, when there was no response from the respondent, the plaintiff issued a legal notice and found out that the respondent had entered into a compromise decree with third parties, admitting that the third parties owned the piece of land sold to the plaintiff.

The plaintiff filed suit before the trial court, praying that the third parties be directed to transfer the disputed property in his name by way of specific performance and consequently cancel the compromise decree entered into by the third parties (now defendants in suit before the trial court) and one of the respondents in this appeal.

The third-party and defendants before the trial court filed an application for rejection of the plaint under order 7 rule 11 on the ground that the plaint lacked pleadings in support of the claim for specific performance.

The trial court allowed the applications and dismissed the suit filed by the plaintiff. Challenging the same, the present appeal has been filed by the plaintiff.

The appellant/plaintiff contended that only after issuing a legal notice in the year 2023, did he find out about the existing suits which resulted in a compromise, hence the decree deserves to be set aside.

The respondents on the other hand contended that the appeal was devoid of merit and the plaint before the trial court was weary of pleadings. It was also contended that a suit for specific performance cannot lie against a third party who is not party to the contract or claiming right through a contracting party.

After considering both arguments, the court at the outset clarified, that no challenge lies against a compromise decree on account of Order XXIII Rule 3A of the C.P.C. The bench relied on Sree Surya Developers & Promoters Vs. N. Sailesh Prasad, Amro Devi Vs. Julfi Ram, Pushpa Devi Bhagat (Dead) Through LR Sadhna Rai(Smt) Vs. Rajinder Singh to back this conclusion.

Secondly, after giving a thorough reading of section 19 of the Specific Performance Act, the Court categorized three groups of individuals who could or against whom a claim for specific performance could be initiated.

“…an analogy of concentric circles of contractual relationships.

1. The contract involving title to the property forms the core. Either of the contracting parties can enforce specific performance of the contract against each other.
2. The next circle consists of a party who is not one of the contracting parties but who claims title subsequent to the contract and through one of the parties to the contract. Specific performance can be enforced against such non-party; except where the non-party is a transferee for value and who has paid money for the transfer of the property in good faith and without notice of the original contract. (Section 19(b)).
3. The outer-circle involves a person who claims title before the contract was entered into in respect of the property and whose identity is known to the plaintiff but who was subsequently dispossessed by the defendant in the suit for specific performance.”

With this analogy, it was very easy for the bench to conclude and identify that the third parties would not fall under either of the above-mentioned categories as they never claimed their title through the respondent and had a pre-existing and individual right.

“Therefore, respondent Nos.1-5 cannot be compelled to execute a sale deed in favour of the appellant/plaintiff or join respondent No.6 in executing a sale deed in favour of the appellant/plaintiff,” the Bench confirmed.

Interestingly, while upholding the order passed by the Trial court, the Bench did not agree with the reasons assigned by the trial court. The Court emphasised that rejection of plaint shall be considered a decree under section 2(2) of the CPC and should not be taken lightly. The bench reiterated that a plaint can only be rejected on the 6 grounds stipulated under CPC and the trial court ought to be circumspect.

“Therefore, even though we cannot fully endorse the reasons given by the Trial Court in allowing the application filed by the answering respondents for rejection of the plaint, we are of the view that the impugned order should be sustained on the grounds urged by the answering respondents and accepted by us.”

Thus the appeal was dismissed.

Boyenepally Srijayavardhan vs. Smt. V. Nirupama Reddy.

Counsel for the appellant: P.Venugopal, Senior Counsel representing Nizampur Chandra Sekhar

Counsel for respondents: D.Prakash Reddy, Senior Counsel representing K.K.Mahender Reddy

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