Supreme Court: Plaintiff Need Not Seek Cancellation of Subsequent Sale Deed with Prior Knowledge of Agreement to Sell

 

Introduction: In a significant ruling, the Supreme Court clarified that a plaintiff in a suit for specific performance is not required to seek cancellation of a subsequent sale deed if the transferee had prior knowledge of the original agreement to sell. This decision underscores the principle that a subsequent purchaser, aware of the existing agreement, cannot claim to be a bona fide purchaser and must comply with the original contractual obligations.

Case Background: The case involved a dispute where the original vendor sold the property to a third party despite having an existing agreement to sell with the plaintiff. The plaintiff filed a suit for specific performance to enforce the original agreement, aiming to transfer the property as per the initial contract. The defendants, who were the subsequent purchasers, contested this, arguing that the suit should also seek the cancellation of their sale deeds.

Legal Context: The Supreme Court's decision hinged on the interpretation of Section 19(b) of the Specific Relief Act, 1963. This section allows specific performance of a contract to be enforced against any person claiming under a subsequent title acquired with notice of the original contract. The Court emphasized that if a subsequent purchaser has prior knowledge of the existing agreement and did not act in good faith, they cannot demand the cancellation of their title as a prerequisite for the plaintiff's specific performance claim.

Court's Rationale: Justices Abhay S. Oka and Sanjay Karol delivered the judgment, referencing the precedent set in Lala Durga Prasad & Ors. v. Lala Deep Chand & Ors. (1953). The Court noted that when the subsequent purchaser is not a bona fide one and has prior knowledge of the original agreement, they are legally obligated to execute the sale deed in favor of the plaintiff without requiring the cancellation of their own sale deed.

Specific Findings: The Court found that the defendants in this case were aware of the initial agreement and thus were not acting in good faith. Consequently, the relief of specific performance could be enforced against them under Section 19(b) of the Specific Relief Act. The judgment underscored that the subsequent purchasers must transfer the property to the plaintiff in compliance with the original agreement, and there was no necessity for the plaintiff to seek cancellation of the subsequent sale deeds.

Implications of the Judgment: This ruling reinforces the legal protection afforded to plaintiffs in specific performance suits, ensuring that their rights are not undermined by subsequent transactions carried out with knowledge of the original agreement. It also sends a clear message to subsequent purchasers about the importance of due diligence and acting in good faith.

Counsel Representations: The appellants were represented by Senior Advocate Ashok Kumar Sharma, assisted by Advocate Vanshdeep Dalmia and others. The respondents had a team including Advocate Sumit Kumar and others.

Conclusion: The Supreme Court's decision in MAHARAJ SINGH & ORS. Versus KARAN SINGH (DEAD) THR. LRS. & ORS. sets a critical precedent for future specific performance suits. It simplifies the plaintiff's burden by eliminating the need to seek cancellation of subsequent sale deeds executed with prior knowledge of an existing agreement. This judgment strengthens the enforceability of contracts and protects the interests of the original contracting parties against subsequent mala fide purchasers.

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