Supreme Court: Whether one plaintiff is entitled to get decree in suit for specific performance of contract if co-plaintiff is not willing to get specific performance?

 ON QUESTION - (f)

19. Now, the question is whether the Plaintiffs were entitled to a decree for specific performance. In his deposition, the first Plaintiff has proved the service of notice of demand to the first Defendant. The suit is filed within limitation, and the Defendants did not raise a plea of delay and laches. There are concurrent findings of the three Courts on the issue of the readiness and willingness shown by the first Plaintiff. There is no reason to disturb the said findings. Now, the question is, what is the effect of the failure of the second Plaintiff to support the first Plaintiff and his conduct of supporting the Defendants? In the facts of the case, the answer lies in the submissions made by the second to fourth Defendants before the High Court. In paragraph 9 of the judgment, the High Court has recorded the following submissions made by the counsel for the second to fourth Defendants:

9. The learned Senior Counsel for the Appellants submitted that the Plaintiff No. 2 Murari Singh did not file the suit nor had signed the vakalatnama and that the said Plaintiff had admitted this fact in his deposition, consequently, the suit was not maintainable. It was further submitted that the percentage of share between the Plaintiffs were not defined in the agreement to sell and, consequently, Under Section 45 of the Transfer of Property Act, the Plaintiffs would be deemed to have equal shares, namely, 50 percent. The learned Senior Counsel for the Appellants contended that since Murari Singh did not institute the suit, the decree for specific performance for the whole land, which was undivided could not have been decreed by the trial court and, consequently, to that extent, the decree passed by the trial court was erroneous. ...............................................................

(emphasis added)

20. In our view, as the second Plaintiff was not interested in getting the specific performance, the decree ought to have been restricted to the undivided one-half share in the suit property in favour of only the first Plaintiff.

 IN THE SUPREME COURT OF INDIA

Civil Appeal No. 6782 of 2013

Decided On: 09.07.2024

Maharaj Singh and Ors. Vs. Karan Singh (Dead) thr. L.Rs. and Ors.

Hon'ble Judges/Coram:

Abhay Shreeniwas Oka and Sanjay Karol, JJ.

Author: Abhay Shreeniwas Oka, J.

Citation: MANU/SC/0587/2024,2024 INSC 491.

Read full Judgment here: Click here.

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Supreme Court: Plaintiff in suit for specific performance of contract Need Not Seek Cancellation Of Subsequent Sale Deed Executed With Prior Knowledge Of Agreement To Sell

A bench of two Hon'ble Judges has rendered this decision. Unfortunately, the attention of the Bench was not invited to binding precedent in the form of a decision of a larger bench in the case of Lala Durga Prasad and Ors. MANU/SC/0008/1953 : (1953) 2 SCC 509. Hence, the decision in the case of B. Vijaya Bharathi   MANU/SC/1032/2017 : 2017:INSC:734 : (2018) 11 SCC 761 is not a binding precedent. Therefore, there was no requirement to make a prayer in the plaint for cancellation or setting aside the subsequent sale deeds.

16. Clause (a) to (c) of Section 19 of the Specific Relief Act read thus:

19. Relief against parties and persons claiming under them by subsequent title.- Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against-

(a) either party thereto;

(b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract;

(c) any person claiming under a title which, though prior to the contract and known to the Plaintiff, might have been displaced by the Defendant;

(d).........................................................

(e) .........................................................

(emphasis added)

In view of Clause (b) of Section 19, the Defendants who are claiming under the sale deeds executed after the execution of the suit agreement can be subjected to a decree of specific performance as the suit agreement can be enforced specifically against such Defendants unless they are bona-fide purchasers without the notice of the original contract. 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.

 IN THE SUPREME COURT OF INDIA

Civil Appeal No. 6782 of 2013

Decided On: 09.07.2024

Maharaj Singh and Ors. Vs. Karan Singh (Dead) thr. L.Rs. and Ors.

Hon'ble Judges/Coram:

Abhay Shreeniwas Oka and Sanjay Karol, JJ.

Author: Abhay Shreeniwas Oka, J.

Citation: MANU/SC/0587/2024,2024 INSC 491.

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When sale of property by ostensible owner can be declared as void?

 However, both the Courts have declined the relief of declaration and possession on the ground that the defendants No. 3 to 12 are bona fide purchasers. In the considered opinion of this Court, the question which arises for consideration is:-

"whether a purchaser of the property from a vendor who has no right, title or interest in the property, can claim to be bona fide purchasers as per Section 41 of the Transfer of Property Act."

3. As noticed earlier, the declaratory decree through which defendant No. 1 was claiming ownership has already been held to be illegal, null and void ab initio being result of impersonation. Such findings of fact have not been challenged before this Court. It is further not in dispute that defendants No. 3 to 12 are residents of the same village where the plaintiff as also Avtar Singh, defendant No. 1 resides. In the considered opinion of this Court, defendants No. 3 to 12 have not complied with the requirements of Section 41 of the Transfer of Property Act. Section 41 provides that a person who is ostensible owner transfers the property for valuable consideration with the consent, express or implied, of the person interested in the immovable property. In the present case, no express or implied consent of Wazir Singh, the appellant-plaintiff who was the owner of the property has been pleaded.

4. The plea of bona fide purchaser is based upon Section 41 of the Transfer of Property Act, 1882. Section 41 of the Transfer of Property Act is extracted as under:-

"Transfer by ostensible owner - Where, with the consent, express or implied, of the persons interested in immovable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorized to make it:

Provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith."

5. In the considered opinion of this Court, before a plea on the basis of bona fide purchaser is allowed, the party pleading has to prove :-

1. The transferor was/is the ostensible owner.

2. Ostensible owner is the owner by the consent, express or implied, of the real owner.

3. The transfer is for consideration.

4. Transferee has acted in good faith and taken reasonable care to ascertain that the transferor has the power to transfer.

6. In the present case, defendants No. 3 to 12 have not pleaded that the transfer in favour of ostensible owner was with the consent of the plaintiff-appellant express or implied. In absence of such pleadings and evidence, ingredients of Section 41 of the Transfer of Property Act does not stand fulfilled.

IN THE HIGH COURT OF PUNJAB AND HARYANA

RSA No. 2697 of 1996 (O&M)

Decided On: 07.03.2018

 Wazir Singh Vs. Avtar Singh and Ors.

Hon'ble Judges/Coram:

Anil Kshetarpal, J.

Citation: AIR 2018 (NOC) 859 P&H

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SHORT NOTES ON LIMITATION ACT 1963 Part 2

S 15. Exclusion of time in certain other cases:-

The present section says that time is to be excluded in the following circumstances:-

Sub S 1- When a suit or execution proceedings are stayed by injunction or order.

Sub S 2- When notice to government or any other authority is necessary, the period of notice. Where notice is not mandatory, period will not be excluded.

Sub S 4 – In computing the period of limitation for a suit for possession by a purchaser at a sale in execution of decree, the time during which proceeding to set aside sale has been prosecuted shall be excluded.

Sub S 5 -When defendant has been absent from India.

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Whether bonafide purchaser can be granted compensation for improvement made by her in absence of pleading and proof?

Under provisions of Section 51 of the said Act, a person making improvements in the property should have acted believing in good faith that he is absolutely entitled to the property. What actions are taken believing in good faith would depend on the facts of each case and hence, the importance of necessary pleadings in that regard. A general belief that the party was a bona fide purchaser for valuable consideration without any further details would not suffice the requirements of making out a case for grant of compensation under Section 51 of the said Act. Hence, the absence of pleadings that the defendant No. 3 believed in good faith that she was absolutely entitled to the property is a big handicap in her effort to seek compensation under Section 51 of the said Act.

9. The evidence on record led by the defendant No. 3 who was the purchaser of the suit property indicates that before executing the sale deed in favour of the defendant No. 3, no public notice came to be issued. It was also admitted that neither he nor the defendant No. 3 were present when the sale deed was executed. He further admitted that after receiving the telegram at Exhibit-52 from the plaintiff, no attempt was made to contact the plaintiff nor was any enquiry made in the office of the Sub Registrar with regard to the plaintiff's sale deed.

10. In Bajrang @ Hanumant Tatyaba Kakade (supra), the test that has to be applied to find out if the purchaser acted bona fide and took reasonable care and caution in making enquiry into the title of the property has been referred to. In paras 5 and 6 of said decision, it has been observed thus:

"5............................................................ The oft quoted and well known passage is reiterated in Bailey v. Barnes, (1984) 1 Ch. 25, 35 which aptly describes the obligation of the vendee before the purchase and that reads thus :

"A purchaser of property is under no legal obligation to investigate his vendor's title. But in dealing with real property, as in other matters of business, regard is had to the usual course of business; and a purchaser who wilfully departs from it in order to avoid acquiring a knowledge of his vendor's title is not allowed to derive any advantage from his wilful ignorance or defect which would have come to his knowledge if he had transacted his business in the ordinary way."

6. The aforesaid is the test which has to be applied to find out whether the purchaser acted bona fide and took reasonable care and caution in making usual enquiry into the title. If he succeeds in showing that even if he had transacted the business in ordinary way he was not in a position together that there was none other owner than the vendors, then, such vendee could be described as bona fide purchaser. On the other hand, if while transacting the business in the ordinary way the vendee would have come to know that there were owners other than the vendor, it cannot be said that such vendee has acted bona fide".

If the evidence led by the defendant No. 3 is tested on the aforesaid touchstone, the same falls short for holding that the defendant No. 3 had acted believing in good faith and had taken reasonable care and caution before purchasing the property.

11. The plea as raised by the defendant No. 3 with regard to absence of mutation entries in the name of the plaintiff cannot further her case inasmuch as the mutation entries are taken for fiscal purposes and cannot be treated as documents of title. Merely on the ground that the plaintiff had not got any mutation entry made in her favour pursuant to purchasing the suit property would not dispense with the necessary enquiries that are required to be made by a purchaser who believes in good faith that he is absolutely entitled to the same. The expressions "believing in good faith" and "absolutely" entitled indicate the nature of enquiries required to be undertaken by a purchaser who seeks to rely upon the provisions of Section 51 of the said Act.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Second Appeal No. 317 of 2014

Decided On: 31.07.2017

Maya Namdeorao Kharodkar Vs. Bhagyashree Pramod Dave and Ors.

Hon'ble Judges/Coram:

A.S. Chandurkar, J.

Citation: 2018(1) MHLJ 150

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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.

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

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.

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Whether husband is competent witness for wife in civil proceeding?

Learned Counsel submitted that the second defendant has not entered the box and, therefore, she cannot claim that she will be a bonafide purchaser for value. Relying on the decision reported in Arunachala Thevar v, Govindarajan Chettiar (1977) 2 M.L.J. 431, learned Counsel submitted that to claim the benefit of a bona fide purchaser, only rebuttal evidence is required, and once the second defendant enters the box and asserts that she is not aware of the agreement, that will be sufficient for the purpose of the case. Since she has failed to depose before court, it is contended that the sale in her favour is only after notice of the agreement. The said contention of the learned Counsel also cannot be accepted.

29. When P.W.1 was examined, he said that with regard to Ex.A-1 agreement, he has spoken to both the second defendant and her husband. If that be so, the husband is a competent witness to speak about the details. In this case, the second defendant's husband has been examined as D.W.1, and he has stated that he is not aware of any such agreement. Further, under Section 120 of the Indian Evidence Act, the husband is a competent witness for the wife in civil proceedings. The question of bona fide purchaser for value also will arise only in case where there is a valid agreement. Once I hold that there was no agreement at all when Ex.A-2 was executed, there is no scope for holding that the second defendant is a bona fide purchaser for value with notice of the agreement. According to me, such a contention is unnecessary for the purpose of this case.

Madras High Court

K. Saroja vs Valliammal And Ors. on 8 March, 1996

Equivalent citations: (1996) 2 MLJ 199

Coram:S.S. Subramani, J.

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When plaintiff is not entitled to get specific performance of contract against subsequent purchaser?

Though initially the plaintiff had obtained an order of injunction from this Court, subsequently, it was vacated and the second defendant had been in possession of the property. The second defendant had purchased the property few days prior to the filing of the suit. So, in the strict sense, the second defendant cannot be termed as pendente lite purchaser. Furthermore, the plaintiff also has not asked for either setting aside the sale or for declaration that the sale by the first defendant in favour of the second defendant is not binding on him. Therefore, this Court holds that the second defendant is a bona fide purchaser and issue No. 3 finds favour with the second defendant.

23. With respect to the reliefs that the plaintiff is entitled to are concerned, as discussed earlier, the plaintiff seems to have parted with some money as advance towards the sale consideration. It is also admitted in the written statement made by the first defendant that certain amounts have been received by him. Subsequently, the second defendant has purchased the property, but prior to the institution of the suit. Admittedly, the plaintiff has not sought for any relief against the second defendant. That being so, even presuming for a moment, a decree for specific performance can be granted in the absence of the such prayer, the same cannot be granted against the second defendant in the present suit.

IN THE HIGH COURT OF MADRAS

C.S. No. 52 of 2002

Decided On: 13.07.2016

Amitav Mukherji

Vs.

 Lakshana Holdings Pvt. Limited and Ors.

Hon'ble Judges/Coram:

Pushpa Sathyanarayana, J.

Citation: AIR 2017(NOC) 428 MAD

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When subsequent purchaser will not get title to property?

 This issue is as to whether defendant nos. 3 to 5 can claim to have title to the suit property as bona fide purchasers without notice in spite of the plaintiffs having title rights in the suit property by virtue of the documents dated 12.5.2004 and 16.6.2004. This issue also will have to be answered in favour of the plaintiffs and against the defendants for the reasons as given hereinafter.

25(i). A claim of bona fide purchaser for value without notice is in terms of Section 19(b) of the Specific Relief Act. This provision of Section 19(b) of the Specific Relief Act requires that before rights are claimed under this particular principle, it is necessary for the subsequent purchasers have to plead and prove that their actions are firstly bona fide and secondly that they do not have any notice of a previous transaction of transfer of title with respect to the suit property.

(ii) It is noted that in the written statement of the defendant nos. 3 to 5 they have not even whispered about their purchase of rights as being bona fide and that they purchased the rights in the suit property without notice of the earlier title in favour of the plaintiff no.1. Not only there is no pleading but even in the evidence led on behalf of defendant nos. 3 to 6 there is not even a whisper that defendant nos. 3 to 6 have purchased rights in the suit property without having notice of the title created in favour of plaintiff no.1 by the documentation dated 12.5.2004 and 16.6.2004. It is also seen that once the Agreement to Sell dated 16.6.2004 in favour of the plaintiff no.1 was a registered document, defendant nos. 3 to 6 are deemed to have notice of this agreement by virtue of Explanation I to Section 3 of the Transfer of Property Act which provides that registration of a document operates as a notice. Therefore, neither there is any pleading nor any evidence that defendant nos.3 to 6 have purchased the rights in the suit property without notice of the prior title in favour of the plaintiff no.1 and which pleading the defendant nos. 3 to 6 cannot legally take up in view of Explanation I to Section 3 of the Transfer of Property Act.

(iii) Though learned counsel for the defendant nos. 3 to 6 argued that in the affidavit by way of evidence filed on behalf of defendant nos. 3 to 6, they have used the expression 'bona fide', however, not only no amount of evidence can be looked into on the plea of bona fide action of the defendant nos. 3 to 6 which is not pleaded in the written statement, but also that even assuming there is a plea of bona fides, the same is not sufficient because the same had to be accompanied by pleadings and proof of defendant nos. 3 to 6 having purchased rights in the suit property without having notice of the title of plaintiff no.1, and which the defendant nos. 3 to 6 have miserably failed to plead and prove as so discussed above.

(iv). Also, in law, once title rights are transferred pursuant to Section 53A of the Transfer of Property Act, there does not arise application of Section 19(b) of the Specific Relief Act and which applies if there is only an ordinary agreement to sell which requires specific performance and not an agreement to sell under Section 53A of the Transfer of Property Act. Object of Section 19(b) of the Specific Relief Act is to give precedence to a later sale deed of bona fide purchases for value without notice and not for giving precedence to transfer of later rights although rights in an immovable property has earlier already been validly transferred and in such a case it is theSection 48 of the Transfer of Property Act that will apply and not Section 19(b) of the Specific Relief Act.

Delhi High Court

Mrs. Vaneeta Khanna And Anr. vs Mr. Rajiv Gupta And Ors. on 1 October, 2015

Author: Valmiki J. Mehta

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When court should permit transferee pendente lite to be added as party in suit?

 From the foregoing facts as stated by the
petitioner in the petition, all rights claimed by the
respondent nos. 3 and 4 over the suit property have been
allegedly transferred in favour of the petitioner. In the
background of such facts, it would be necessary to consider
whether the petitioner is entitled to be impleaded in the suit
filed by the respondent nos. 1 and 2. Taking note of the
reliefs sought in the suit filed by respondent nos. 1 and 2, it
cannot be disputed that the relief if granted therein would
affect the right claimed by the petitioner over the suit
property. In this context, the observations of the Apex Court
in the judgment reported in (2006)9 SCC page 199 in the
case of Devendra Kumar Sarewgee and others V/s
Purbanchal Estates (P) Ltd., and others, at paras 11 and
12 would be relevant which read thus :
“11. This Court after detailed
consideration of the case-law in Raj
Kumar V/s Sardari Lal has held that the
transferee pendente lite is treated in the
eye of the law as a representative-ininterest
of the judgment-debtor and
bound by the decree passed against the
judgment-debtor. In case of an
assignment, creation or devolution of any
interest during the pendency of any suit,
Order 22 Rule 10 CPC confers a discretion
on the court hearing the suit to grant
leave to the person in or upon whom such
interest has come to vest or devolve to be:9:
brought on record. Bringing on a lis
pendens transferee on record is not as of
right but in the discretion of the court.
12. To the similar effect is the judgment
of this court in Amit Kumar Shaw V/s
Farida Khatoon. It has been observed as
follows : (SCC p. 411)
“The doctrine of lis pendens applies
only where the lis is pending before a
Court. Further pending the suit, the
transferee is not entitled as of right to be
made a party to the suit, though the
Court has a discretion to make him a
party. But the transferee pendente lite
can be added as a proper party if his
interest in the subject-matter of the suit is
substantial and not just peripheral. A
transferee pendente lite to the extent he
has acquired interest from the defendant
is vitally interested in the litigation,
whether the transfer is of the entire
interest of the defendant; the latter
having no more interest in the property
may not properly defend the suit. He may
collude with the plaintiff. Hence, though
the plaintiff is under no obligation to make
a lis pendens transferee a party; under
Order 22 Rule 10 an alienee pendente lite
may be joined as party. As already
noticed, the Court has discretion in the
matter which must be judicially exercised
and an alienee would ordinarily be joined
as a party to enable him to protect his
interests. The Court has held that a
transferee pendente lite of an interest in
immovable property is a representativein-interest
of the party from whom he has
acquired that interest. He is entitled to be
impleaded in the suit or other proceedings
where the transferee pendente lite is
made a party to the litigation; he is
entitled to be heard in the matter on the
merits of the case” .
IN THE HIGH COURT OF BOMBAY AT GOA
WRIT PETITION NO. 564 OF 2007
Krishnan Venugopal,

V 
 Antonio Joao A. Braganza,

CORAM : F. M. REIS, J
DATE : 5th SEPTEMBER, 2012.
Citation:(2012)6 ALLMR 934: 2013(1) MHLJ435

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Basic principles when court should permit impleadment of transferee pendents lite in suit for specific performance of contract

 Taking upon  the conspectus of the  view  taken by the
Hon’ble Supreme Court in the earlier judgments, in the   case of
Vidur Impex  & Traders Pvt.Ltd.  vs.   Tosh  Apartments Pvt.Ltd.
And others : (2012) 8 SCC 384 finally in paragraph 41, the Apex
Court  laid down the following principles:
“41. Though there is   apparent   conflict   in
the   observations   made   in   some   of   the
aforementioned   judgments,   the   broad   principles
which should  govern disposal of an application for
impleadment  are :

41.1 The   court   can,     at   any   stage   of   the
proceedings, either on an application made by the
parties or otherwise, direct   impleadment of any
person as party,  who ought to have been joined   as
plaintiff  or defendant or whose presence before the
court   is     necessary   for   effective       and   complete
adjudication  of the issues involved in the suit.
41.2 A   necessary  party  is  the person  who
ought to be joined as party to the suit and in whose
absence   an effective decree   cannot be passed by
the court.
41.3 A   proper   party   is     a   person   whose
presence   would   enable   the   court   to   completely,
effectively and properly adjudicate upon all matters
and   issues,   though   he   may     not   be   a   person   in
favour  of or against whom a decree is to be made.
41.4 If a person is not found to be  a proper
or   necessary   party,   the   court   does   not   have   the
jurisdiction to order his impleadment   against the
wishes  of the plaintiff.

41.5 In a  suit  for   specific performance,
the court can order impleadment   of a purchaser
whose   conduct   is   above   board,   and   who   files
application   for   being joined   as   party within
reasonable time of his acquiring knowledge about
the pending litigation. (emphasis supplied)
41.6 However,   if the applicant is guilty of
contumacious     conduct     or is     beneficiary   of a
clandestine   transaction or a transaction made   by
the owner   of the suit property   in violation of the
restraint   order   passed   by   the   court   or   the
application is unduly  delayed    then the court will
be   fully     justified   in   declining   the   prayer   for
impleadment.”
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 BENCH AT NAGPUR 

WRIT PETITION NO: 5541 /2013 
 Shrikrushna   Narayan  Tupkari v Mahadeo   s/o Bansilal  Dahale

CORAM:   A.B.CHAUDHARI, J.
DATED  :   27th February,  2014 
Citation:2014 (4) MHLJ 393

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When plea of bonafide purchaser for value can not be accepted?

Coming to the next part of this point regarding the subsequent sale of the suit properties in favour of respondent Nos. 2 to 6 and the deceased Nizam Mohamad under Exs. A. 14 and A -15, it is fantastic,unbelievable but relevant for consideration since the property which has been agreed to be sold for a sum of Rs. 3,50,000/- in favour of the appellant has been sold for an amount of Rs. 61,000/- and, therefore, no further evidence need be necessary for the subsequent sale to have been taken as sham and nominal.

While so many transactions are going on including paper publications, it cannot also be said that the purchasers therein were not aware of the earlier agreement in Ex.A.6 nor did they have any other information to the said effect. This part of the case relating to the subsequent sale or purchase by the respondent Nos.2 to 6 and the deceased Nizam Mohamad under Exs.A.14 and A.15 respectively dated 25-5-1984 and 26-5-1984 have neither been discussed properly nor answered in the manner expected by law by the lower Court.

53. Moreover, it further comes to be known that the subsequent purchasers had sufficient time to enquire prior to getting the sale deed registered in their favour but they do not seem to have made such genuine enquiries in and around the area where the property locates and the parties reside and it is the legal maxim "CAVEAT EMPTOR" which would apply to the case in hand. It is the bounden duty of the purchaser to make all such necessary enquiries and to ascertain all the facts relating to be property to be purchased prior to committing in any manner and hence they cannot simply come forward to put up the general plea that they are the bona fidepurchasers for value and without notice especially when the purchase is not for the proper value, which would only indicate sham and nominal. This point is answered accordingly. MADRAS HIGH COURT

Sri Brahadambal Agency and Partnership Firm  V. Ramasamy and others

Dated :  23.7.2001.

Citation : 2002 AIR (Madras) 352

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When bonafide purchaser is entitled to retain property in suit for specific performance of contract?

The last contention urged is whether Defendant Nos. 12 to 15 (the Appellants herein) are protected Under Section 19(b) of the Specific Relief Act as they being the bona fide purchasers. Learned Counsel for Defendant Nos. 12 to 15 has rightly invited our attention that the non-compliance of the contract regarding payment of balance consideration to Defendant Nos. 1 to 11 on the part of the Plaintiff within nine months is an undisputed fact and further the agreement of sale is not registered, as is evidenced from the encumbrance certificate obtained by Defendant Nos. 12 to 15 before they entered into an agreement (Exhibit B-1). Both the Courts below have erroneously recorded an erroneous finding on the non existent fact holding that the agreement of sale in favour of the Plaintiff is a registered document which, in fact, is not true. The same is evidenced from the encumbrance certificate. More so, Defendant Nos. 12 to 15 before entering into the agreement with Defendant Nos. 1 to 11 have made proper verification from the competent authority to purchase the part of the suit schedule property and got the agreement of sale (Exhibit B-1) executed in their favour, from Defendant Nos. 1 to 11 and thereafter, they got the sale deed registered by paying sale consideration amount. As could be seen from the agreement of sale and registered sale deed, which is marked as Exhibit B-3, it is very clear that Defendant Nos. 12 to 15 have paid the sale consideration amount of the property, therefore, the reliance placed upon Section 19(b) of the Specific Relief Act as they being the bona fide purchasers, the specific performance of contract cannot be enforced against the transferees. Defendant Nos. 12 to 15 being the transferee as they have purchased the suit schedule property for value and have paid the money in good faith and without notice of the original contract.

In view of the aforesaid facts, the purchase of the suit schedule property by Defendant Nos. 12 to 15 for a valuable consideration is established by the above Defendants by adducing evidence on their behalf before the trial court. Both the Courts below have omitted to consider this important piece of pleadings as also the material evidence on record thereby the concurrent finding recorded on the contentious issues has been rendered erroneous in law and is liable to be set aside. Accordingly, we answer the said issues in favour of Defendant Nos. 12 to 15.

Equivalent Citation : 2016 (2)MhLj 307

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 3570 of 2015 (Arising out of S.L.P. (C) No. 1169 of 2008)

Decided On: 07.04.2015

Appellants: Padmakumari and Ors.
Vs.
Respondent: Dasayyan and Ors.

Hon'ble Judges/Coram:V. Gopala Gowda and C. Nagappan, JJ.

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Who is Bona fide purchaser of property?

This   takes   me   to   the   next   substantial   question   of   law   i.e.
Whether   the   appellant   could   be   treated   as   a   bona   fide
purchaser.     Bona   fide   purchaser   is   that   person   who   takes
reasonable care to ascertain that the transferor had the power
to make transfer and he had acted in good faith and also that
the true owner had consented to such transfer.   Since true
owners are challenging the transfer, there is no question of
consent.  Let us see if there is evidence of appellant’s acting in

good faith and whether he had taken reasonable care.  I find
that this is a fit case of lack of good faith and not even a
reasonable care has been taken.  It appears, on the other hand,
that defendant no.1 entered into contract of purchase of the
property with open eyes.  The reason for saying so is that the
appellant does not enter into witness box to make out the case
in pleading and second in his own plaint vide Exh.36, he had
made   an   averement   and   assertion   that   the   shop   and   the
property belonged to the joint family.  This clearly shows that
defendant no.1 has had full knowledge of the property being
owned by the family and not by defendant no.2 alone.   The
appellant, therefore, could not be treated to be a bona fide
purchaser.   Although I find that the property is not a joint
family   property   as   such,   all  the  same   it   is  jointly   acquired
property in which each one of them has equal share.   In the
circumstances, there is no difficulty in confirming the judgment
and   decree   as   passed   by   the   court   below. 
IN THE HIGH COURT OF JUDICATURE AT BOMBAY.
NAGPUR BENCH, NAGPUR.
SECOND APPEAL NO.109 of 1997.
 Kausabai wd/o Rajaram Waradkar,
V
 Gayabai wd/o Gundaji Mogre,

   CORAM:  C.L.Pangarkar, J.
   DATED :   13th April, 2010.
Citation:2010(4) MHLJ 46

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What will be effect of consent decree on subsequent sale of suit property?

Under the said consent decree, the decree holders had agreed to hand over possession of their plots to the Judgment Debtors. It was agreed that the Judgment Debtors shall provide free of cost on ownership basis an area of 1850 sq.ft. in the proposed building to the decree holders.

Pursuant to the said consent decree, all the pending litigations between the parties including the High Court proceedings were withdrawn as per the terms of the said consent decree.

 In so far as the obstructionists are concerned, they have claimed rights through the Judgment Debtor during the pendency of the execution proceedings filed by the decree holders. It is not in dispute that when the obstructionists claimed their alleged rights from the Judgment Debtor, the Executing Court had already granted injunction against the Judgment Debtor from creating any third party rights. The consent decree was already registered which amounted to public notice.

The obstructionists could not have claimed before the Executing Court that they were bonafide purchasers without notice. The findings by the Executing Court against the obstructionists had attained finality in view of the confirmation thereof by the lower Appellate Court. I have perused the findings rendered by both the Courts below and in my view, there is no perversity in the concurrent findings rendered by both the Courts below and thus cannot be interfered with under section 100 of the Code of Civil Procedure, 1908.

Bombay High Court

Avinash Uttam Kadam vs Smt. Hajira Begum Nisar Ahmad And ... on 9 December, 2015

Bench: R.D. Dhanuka

   SECOND APPEAL (ST.) NO.30922 OF 2015
               Citation;2016(3)ALLMR156

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When burden of proof is on subsequent purchaser?

 As noted earlier, the expression 'bona fide purchaser'

means and implies a purchaser who purchases a property without

notice, actual or constructive of any adverse rights, claims, interest

or equities of other in and to the property sold. Therefore, at the

stage of seeking leave to implead/carry out consequential

amendment, in our opinion, there was no question of adverting to

any evidence or the lack of it in determining whether the

subsequent purchaser was indeed a bona fide purchaser for value

and without notice of the original contract.

35] The provision contained in section 19(b) of the said

Act which affords protection to a subsequent purchaser who

purchases the contracted property in good faith and for value

without notice of the original contract, is in the nature of an

exception to the general rule. Therefore, it is a settled position in
law that the onus of proof of good faith is upon the subsequent
purchaser who takes a plea that he is an innocent or bona fide
purchaser for value and without notice of the original contract. In

the case of Shankarlal Narayandas Mundade v The New Mofussil

Co. Ltd. & ors. AIR (33) 1946 Privy Council 97, in the context of

section 27 of the Specific Relief Act, 1877, which corresponds to

section 19 of the Specific Relief Act 1963, the Privy Council, by

relying upon its earlier authority in the case of Bhup Narain Singh

V. Gokul Chand Mahton AIR

1934 PC 68 has held thus:

“Their Lordships have found it unnecessary to

examine the evidence which was called on behalf of

the plaintiff to show that these defendants in fact had

notice of the earlier contract, since a decision of this

Board is clear authority for the proposition that the

burden of proving good faith and lack of notice lay

upon the defendants”.

36] In the case of R.K.Mohaammed Ubadullah Vs. Hajee C.

Abdul Wahab (D) by L.Rs. AIR

2001 SC 1658 , in the context of

section 19 of the Specific Relief Act, 1963, the Supreme Court has

observed thus :

14. ….........

As can be seen from Section 19(a) and (b)

extracted above specific performance of a contract

can be enforced against (a) either party thereto and

(b) any person claiming under him by a title arising

subsequent to the contract, except a transferee for

value who has paid his money in good faith and

without notice of the original contract. Section 19(b)

protects the bona fide purchaser in good faith for

value without notice of the original contract. This

protection is in the nature of exception to the general

rule. Hence, the onus of proof of good faith is on

the purchaser who takes the plea that he is an

innocent purchaser. Good faith is a question of

fact to be considered and decided on the facts of

each case.

(emphasis supplied)

37] The pleadings in the context of the proposed

amendment have therefore to be construed in the light of legal

position that the protection afforded to the subsequent purchaser

by section 19(b) of the said Act is in the nature of an exception to

the general rule and therefore, the onus of proving good faith is
on the purchaser who takes the plea that he is an innocent
purchaser. Ultimately, good faith is also question of fact to be
considered and decided on the facts of each case. For this purpose,
an opportunity has to be afforded to the parties to lead evidence
in the course of trial. We are, therefore, unable to share the view

taken by the learned Single Judge that in the facts and

circumstances of the present case there were insufficient pleadings

or evidence on the aspect of the subsequent purchaser not being a

bona fide purchaser for value and without notice of the original

contract.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO.42 OF 2014
IN
CHAMBER SUMMONS NO.2087 OF 2011
IN
SUIT NO.1241 OF 2007

Nitin Gandhi  vs. Dinyar Pheroz Dubash 

CORAM: MOHIT S. SHAH, C.J. &
M.S.SONAK, J.

JUDGMENT PRONOUNCED ON : 09 Oct. 2014
Citation;2015(2) MHLJ850

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Whether it necessary to produce material to show that subsequent purchaser is bonafide purchaser at the time of amendment of plaint?

At the stage of considering the chamber summons
seeking leave to implead/amend, the Court is really not concerned
with the veracity or otherwise of the statements made in the
proposed text of the amendment. Therefore, at that stage,
pleadings to the effect that the subsequent purchaser is not a bona
fide purchaser would suffice. There is no requirement of
producing any material or evidence for establishing that the
subsequent purchaser is not a bona fide purchaser, at the stage
when leave for impleadment/consequential amendments is beingapplied for. As noted earlier, the expression 'bona fide purchaser'
means and implies a purchaser who purchases a property without
notice, actual or constructive of any adverse rights, claims, interest
or equities of other in and to the property sold. Therefore, at the
stage of seeking leave to implead/carry out consequential
amendment, in our opinion, there was no question of adverting to
any evidence or the lack of it in determining whether the
subsequent purchaser was indeed a bona fide purchaser for value
and without notice of the original contract.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
APPEAL NO.42 OF 2014
IN
CHAMBER SUMMONS NO.2087 OF 2011
IN
SUIT NO.1241 OF 2007
Nitin Gandhi & anr. ..Appellants
vs.
Dinyar Pheroz Dubash & ors. .. Defendants.

CORAM: MOHIT S. SHAH, C.J. &
M.S.SONAK, J.

JUDGMENT PRONOUNCED ON : 09 Oct. 2014
Citation;2015(2) MHLJ850

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When plaintiff is not entitled to get cancellation of sale deed?

Code of Civil Procedure, 1908 - S. 100 - second appeal - plaintiff filed suit for cancellation of sale deed contending that when property was sold by mother and brother of plaintiff, plaintiffs were minor and their interest in the property was not taken care of - on facts, suit filed in collusion with venders of property - Trial Court dismissed suit - held, suit being abuse of process of court plaintiff not entitled to relief claimed - Trial Court was justified in dismissing suit - appeal dismissed.

5.2 This Court further finds that, and it is also the finding of the Court  below  that,  not  only  the  plaintiffs  were  not  entitled  for declaration as prayed for, but there was connivance of the plaintiffs with  the  family  members,  being  defendant  Nos.  3,4  &  5,  and thereby they had attempted to abuse the process of law. There is also finding to the effect that, the bona­fide purchaser is kept in litigation throughout these decades by one of the family members, since the prices of the property has gone up. The tendency to abuse the process of law needs to be curbed, for which even cost needs to be imposed. While recording so, this Court has kept in view the observations of Honourable the Supreme Court of India in the  case  of  Rakesh  Kumar  Goel  V.  U.P.  State  Industrial Development Corporation Ltd. and others, reported in AIR 2010 SC 2451, which is to the effect that, filing of a petition before the Court of law is not like buying a lottery ticket that if luck favours, might bring a windfall, but would cost no more than the expresses of litigation. This litigation is no exception to what is observed by Hon'ble the Supreme Court of India as recorded above. Further, this Court has also kept in view the observations of Hon'ble the Supreme  Court  of  India  in  the  case  of  Salem  Advocate  Bar Association vs. Union of India, reported in (2005) 6 SCC 344 which is to the effect that, judicial notice can be taken of the fact that unscrupulous  parties  take advantage  of the fact that  either  the costs are not awarded or nominal costs are awarded against the unsuccessful party, unfortunately it has become a practice to direct parties to bear their own costs, such a practice also encourages filing of frivolous  suits. The dismissal  of this Second  Appeal  in these  facts,  without  imposing  costs,  would  encourage  filing  of frivolous suits and appeals. Under these circumstances, cost is required  to  be  imposed  and  the  same  should  not  be  nominal either. In the facts of this case, the cost is quantified as Rs.25,000/­.

GUJARAT HIGH COURT

Hon'ble Judges:Paresh Upadhyay, J.

Vaghela Suryaba Ranchhodji Versus Becharbhai Adarbhai Patel-decd.

SECOND APPEAL No. 194 of 2013 ; J.Date :- JANUARY 08, 2014

Equivalent Citation(s): 2014 (2) GLR 1068 : 2014 JX(Guj) 58,AIR 2014(NOC) 449 GUJ

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