Saturday, 13 January 2018

Whether subsequent purchaser can be treated as bonafide purchaser if he fails to make inquiry about original title deeds prior to purchase of property?

Now, this takes the Court to decide whether one of the subsequent purchasers i.e. the appellant herein is a bona fide purchaser of the subject land or not. In order to examine this aspect, it is necessary to consider the conduct of the subsequent purchasers before execution of sale deed dated 03.09.2014. It is settled principle of law under Section 19(b) of the Specific Relief Act that specific performance of contract may be enforced against any other person claiming under him by a title arising subsequently to the contract. If a person, as an owner of the property, has entered into an agreement to sale, he cannot, thereafter, convey the same property to any other person, as after prior agreement to sale, he cannot be said to be free owner of the property. If the owner alienates the property, he can alienate it only subject to the rights created under the prior agreement to sale. It is the case of the appellant i.e. subsequent purchaser that he has no knowledge about execution of sale agreement inter se between plaintiff and defendant No. 1 and, therefore, they have bona fidely entered into the registered sale deed dated 03.09.2014 without notice of prior sale agreements and paid full value in good faith. Upon re-appreciation of the events, which occurred before and after registered sale deed dated 03.09.2014, it shows that the defendants with unusual haste, carried out the sale deed. The obvious reason is such that the sale deed executed and registered on 03.09.2014 discloses that the appellant was aware of pending proceedings being Special Civil Suit No. 405 of 2008 between defendant No. 1 and his predecessor in title. Admittedly, the dispute came to be resolved between the parties to the said suit on 12.09.2014 and prior to it, the sale deed was executed and registered. The said sale deed indicates that the appellant and respondent No. 3 herein have paid amount of consideration by way of various cheques of the date 01.09.2014 to 04.09.2014. Admittedly, the amounts of cheques were withdrawn by defendant No. 1 on 16.09.2014 and 17.09.2014 as per the statement of account annexed with the affidavit produced before this Court during the course of hearing. It is a matter of fact that though the dispute has been resolved on 12.09.2014, the suit was disposed of only on 02.10.2014. Normally, there is no reason to consider about withdrawal of the amounts on the part of the original owner - defendant No. 1 but, in view of the peculiar facts of this case, conduct of the defendants goes to suggest that before the issue is resolved in a pending suit between defendant No. 1 and his predecessor in title, the sale deed was executed and registered and meanwhile, the amounts of consideration were withdrawn in cash by the original owner i.e. defendant No. 1 and thereafter, the Court has passed the order of disposal of the suit on 02.10.2014. This speaks a lot about conduct of the defendants, who in collusion, joined hands to frustrate the sale agreements in question. It requires to be considered here that the defendants with unusual haste, carried out the sale deed, where such transactions, as a rule, are carried out with appropriate inquiry and, more particularly, after obtaining title clearance certificate and also by publishing notice in newspaper before purchase. Admittedly, no such steps have been taken by the subsequent purchasers i.e. the appellant and respondent No. 3 herein. Not only that, they have not bothered to inquire about the whereabouts of the original title deeds. One more significant aspect of the case required to be considered is such that defendant No. 1 agreed to sale the subject land to the plaintiff for consideration of Rs. 51 lacs which was fixed in the year 2008 whereas, the defendants inter se fixed the sale price of the subject land of Rs. 17,50,000/- in the year 2014. Meaning thereby, from 2008 to 2014, price of the subject land has been reduced to about 66% which can never be believed by any prudent man dealing in the transaction of the immovable property and further, the Court cannot overlook or ignore the existing scenario in the market about the prices of the land during the period in question.

15. The plain language of Sub-Section (b) of Section 19 of the Specific Relief Act shows that subsequent transferee can retain the benefit of transfer by purchase, which prima facie, he had right to get, only after satisfying two conditions i.e. (1) he must have paid the full value for which, he purchased the property and; (2) he must have paid it in good faith and without notice of prior contract. The burden of proof is upon the subsequent purchaser to establish existence of these two conditions in order to see that his right prevails over the prior agreement of sale. In the case on hand, the conduct of the defendants themselves indicates that the appellant herein is not a bona fide purchaser because, the sale deed came to be executed and registered with unusual rapidity. Normal procedure for sale/purchase of immovable property as a rule is not such which is adopted in the present case. Hence, required ingredients of Section 19(b) of the Specific Relief Act are missing in this case and hence, protection of Section 19(b) is not available to the subsequent purchaser i.e. appellant herein.


Appeal From Order No. 457 of 2016 and Civil Application No. 12575 of 2016 in Appeal From Order No. 457 of 2016

Decided On: 10.01.2017

Ghnshyambhai Dhirubhai Barvaliya Vs. Rasikbhai Dhirubhai Ambaliya and Ors.

Hon'ble Judges/Coram:
S.H. Vora, J.
Citation: AIR 2017 Gujarat 164.
Read full judgment here: Click here

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