In Specific Performance Suit, Separate Relief For Possession Not Required When Transfer Of Possession Is Implicit In Agreement To Sell : Supreme Court

The Supreme Court observed that when possession of the immovable property is transferred implicitly upon execution of the sale deed, a separate suit seeking possession of the immovable property is not required under Section 22 of the Specific Relief Act, 1963 (“SRA”).

While holding so, the bench comprising Justice JB Pardiwala and Justice R Mahadevan explained two different circumstances: when the plaintiff is required to specifically claim a separate relief of possession under Section 22 SRA and when the plaintiff is not required to specifically claim a separate relief of possession.

The Court was dealing with an appeal challenging a Delhi High Court's judgment which held that a suit filed for specific performance of an agreement to sell a land situated in Gurgaon was not maintainable in Delhi. The High Court held that the suit had to be filed in the Court which has jurisdiction over the property.

An argument was raised that since no separate relief for possession was claimed in the suit as per Section 22 of the SRA, Section 16 of the Code of Civil Procedure (which mandates that the suit has to be filed in the place where the property was situated) was not applicable. Therefore, it was argued that since the suit was a personal action to execute an agreement, the suit can be filed at the place where the defendant resided as per the proviso to Section 16 CPC

To consider the argument, the court referred to Babu Lal v. Hazari Lal Kishori Lal and Others (1982). The Court said that in a specific performance of the agreement to sale simpliciter, the plaintiff would avail complete relief without specifically filing a separate suit for delivery of possession.

“Similarly, a case may be visualised where after the contract between the plaintiff and the defendant the property passed in possession of a third person. A mere relief for specific performance of the contract of sale may not entitle the plaintiff to obtain possession as against the party in actual possession of the property. As against him, a decree for possession must be specifically claimed or such a person is not bound by the contract sought to be enforced. In a case where exclusive possession is with the contracting party, a decree for specific performance of the contract of sale simpliciter, without specifically providing for delivery of possession, may give complete relief to the decree-holder.”, the court observed in Babu Lal's case.

Further, the Court in Babu Lal's case approved the Allahabad High Court's decision in Balmukand v. Veer Chand (1954) which held that "it was not necessary in a suit for specific performance (of agreement to sell) either to separately claim possession nor was it necessary for the court to pass a decree for possession. A decree for specific performance of a contract includes everything incidental to be done by one party or another to complete the sale transaction, the rights and obligations of the parties in such a matter being governed by Section 55 of the Transfer of Property Act.”

The Court reasoned that when the 'transfer of possession' is implicit in contracts for the sale of immovable property under Section 55 of the Transfer of Property Act, 1882, even if possession is not explicitly sought, a suit for specific performance inherently involves elements that affect the property's location, making it a "suit for land." A suit for land is a suit in which the relief claimed relates to the title or delivery of possession of land or immovable property.

Further, the Court observed that the decision in Adcon Electronics Pvt. Ltd. v. Daulat and Another (2001) would be inapplicable to the facts of the present case. In Adcon's case, the Court proceeds on the understanding that a suit for specific performance of an agreement to sell is an action in personam requiring the plaintiff to specifically file a separate suit for possession. The Court instead placed reliance on Babu Lal's case, which took note of the divergent views occupying the field before the enactment of the Specific Relief Act in 1963 and was not considered in Adcon's case.

“the decision in Babu Lal (supra) takes into account the change brought about by the introduction of Sections 22 and 28 to the Specific Relief Act, 1963 respectively which has changed the nature of the relief available under Section 22 by allowing the plaintiff to seek the relief of possession, partition, etc. simultaneously along with the prayer for specific performance.”, the Court said.

The Court noted that the agreement stipulated that the possession of the suit property has to be handed over by the defendants to the plaintiff upon payment of the balance 5% of the total sale consideration. Further, section 55(1) (f) of the Transfer of Property Act also stipulates that the seller of an immovable property is required to handover the possession of the property to the buyer pursuant to the execution of the sale deed.

It was also held in Babu Lal (supra) that in view of the interplay between Sections 22 and 28 of the Specific Relief Act respectively and Section 55 of the Transfer of Property Act, the handing over of the possession of the immovable property in respect of which a decree of specific performance has been granted is only incidental.

In this backdrop, the Court said : 

"Thus, it is clear from the terms of the alleged contract between the parties that the transfer of possession of the suit property is implicit in the said contract and absence of a specific prayer seeking transfer of possession would not have any bearing on the character of the suit, which is one covered by Section 16(d) of the CPC."

Also From Judgment: Suit For Specific Performace Of Agreement To Sell To Be Filed In Court Having Jurisdiction Over Property : Supreme Court

Case Title: ROHIT KOCHHAR Vs. VIPUL INFRASTRUCTURE DEVELOPERS LTD. & ORS.

Citation : 2024 LiveLaw (SC) 951

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