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

The Supreme Court held that a suit for specific performance of an agreement to sell must be instituted in the Court within whose local jurisdiction the property -which is the subject of the agreement- was situated as per Section 16 of the Code of Civil Procedure, 1908.

The Court rejected the argument that a specific performance decree can be enforced by the personal obedience of the defendant and hence such a suit was maintainable at the place where the defendant resided/carried out business in terms of the proviso to Section 16 CPC.

The bench comprising Justice JB Pardiwala and Justice R Mahadevan held that the proviso to Section 16 was not applicable.

Brief facts

In this case, the agreement was with respect to a suit situated in Gurgaon, Haryana. The plaintiff filed the suit in the original side of the Delhi High Court. A single bench of the High Court held the suit to be maintainable, applying the proviso to Section 16. In appeal, the division bench of the High Court held the suit to be not maintainable and returned the plaint for presentation before the competent court.

Challenging the division bench's decision, the plaintiff appealed to the Supreme Court. Referring to the proviso of Section 16 of the Civil Procedure Code of 1908, the appellant contended that the courts in Delhi would have jurisdiction to grant specific relief because he sought a specific performance simpliciter without seeking a decree of possession, thus it required personal obedience of the defendant who lives and carries out his work in Delhi making the suit to be maintainable before the Delhi Court's.

Section 16 of the CPC governs territorial jurisdiction, requiring suits related to immovable property, such as recovery, partition, foreclosure, or compensation for wrongs, to be filed in the court where the property is located. However, the proviso allows suits seeking relief or compensation for wrongs to immovable property held by the defendant to be filed either where the property is located or where the defendant resides, conducts business, or works, provided the relief can be obtained through the defendant's personal obedience.

The Court rejected the appellant's argument, ruling that the case did not fall under the proviso to Section 16 CPC. It noted that the personal obedience of the defendant applies only when no action outside the court's jurisdiction is required. Since the property in question was in Gurugram, necessitating the defendant's presence there for executing the sale, the proviso to Section 16 CPC was deemed inapplicable.

“The registration of the sale deed in the present case would have to take place at Gurugram as the suit property is situated there. The sale deed is not sought to be registered at Delhi and the implication of the grant of specific relief would be that the trial court will have to direct the defendants to move out of Delhi and go to Gurugram to get the sale deed registered. As rightly held by the Division Bench of the High Court, such a relief cannot be obtained entirely by the personal obedience of the defendants as the defendants will have to go to the jurisdiction of another court to get the decree executed.”, the Court observed.

Court can't compel registration of sale agreement at a place beyond its jurisdiction

The bench referred to the recent judgment in Babasaheb Dhondiba Kute v. Radhu Vithoba Barde which held that the conveyance by way of sale would take place only at the time of registration of a sale deed in accordance with Section 17 of the Registration Act, 1908. Till the time of such registration, no conveyance could be said to have taken place.

Drawing from this precedent, the Court observed :

"Thus, even if the suit for specific performance is decreed without a specific decree for transfer of the possession of the suit property, the same can be enforced only when the trial court directs the defendants to convey the suit property to the plaintiff by getting a sale deed registered with respect to the suit property, as it is only after registration that the transfer of title would take place from the defendants to the plaintiff. The registration of the sale deed in the present case would have to take place at Gurugram as the suit property is situated there. The sale deed is not sought to be registered at Delhi and the implication of the grant of specific relief would be that the trial court will have to direct the defendants to move out of Delhi and go to Gurugram to get the sale deed registered. As rightly held by the Division Bench of the High Court, such a relief cannot be obtained entirely by the personal obedience of the defendants as the defendants will have to go to the jurisdiction of another court to get the decree executed."

Reference was made to the case of Harshad Chiman Lal Modi v. DLF Universal Ltd (2005) where the Court observed that “Section 16 of the CPC recognises a well-established principle that actions against res or property should be brought in the forum where such res is situate. A court within whose territorial jurisdiction the property is not situate has no power to deal with and decide the rights or interests in such property. In other words, this Court held that a court has no jurisdiction over a dispute in which it cannot give an effective judgment.”

Accordingly, the court dismissed the appeal and advised the appellant to take appropriate steps to present the plaint before the court of competent jurisdiction and get his suit adjudicated on merits in accordance with the law.

"We agree with the view expressed by the High Court in the impugned order that the proviso to Section 16 would be applicable to a case where the relief sought by plaintiff can be obtained through the personal obedience of the defendant, that is, the defendant has not to go out of the jurisdiction of the court at all for the purpose of the grant of relief. However, since the present case would require the defendants to go to Gurugram for the purpose of execution of the sale deed, hence the proviso to Section 16 of the CPC will not be applicable," it observed.

Even if a specific prayer for possession is not made, the suit for specific performance will fall within clause (d) of Section 16 CPC.

"If we were to hold otherwise, then it would give rise to a situation where a plaintiff would be allowed to file a suit for specific performance simplicter and having obtained a decree therein, the plaintiff would pray for the transfer of the execution proceedings to the court within whose territorial jurisdiction the suit property lies and thereafter seek amendment of the plaint to include a prayer for transfer of possession, which has been expressly held to be permissible in Babu Lal (supra). An interpretation which gives rise to the possibility of such misuse of law cannot be allowed."

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

Citation : 2024 LiveLaw (SC) 951

Click here to read/download the order