Court’s Decision
The Kerala High Court, through Justice M.A. Abdul Hakhim, allowed a first appeal and set aside the trial court’s order that had granted an attachment before judgment over the suit property. The Court held that the plaintiff, who was not a party to the original agreement for sale, did not become a “representative in interest” under Section 15(b) of the Specific Relief Act, 1963, nor did he qualify as a “buyer” under Section 55(6)(b) of the Transfer of Property Act, 1882.
Emphasizing that:
“Prima facie, the plaintiff will not attain the status of buyer under Section 55(6)(b) of the Transfer of Property Act to claim a charge over the plaint schedule property,”
the Court concluded that the impugned order granting attachment was unsustainable and dismissed the interlocutory application.
Facts
The case revolved around a property measuring 29.78 ares with structures thereon, originally owned by the first defendant. An agreement for sale was entered on 18.09.2014 between defendants 1 and 2 (owners) and defendant 3, with an advance of ₹35 lakhs paid. The agreement couldn’t be completed, and a new agreement was later executed between defendant 3 and the plaintiff on 28.04.2016, where defendant 3 agreed to assign the property to the plaintiff for a higher price and collected an advance of ₹25 lakhs.
The plaintiff filed a suit for recovery of ₹35,62,500 with interest, claiming a charge over the property under Section 55(6)(b) of the Transfer of Property Act, based on the assertion that he had an implied and constructive contractual right over the property.
He also sought and obtained an order for attachment before judgment under Order XXXVIII Rule 5 of the CPC. The defendants 1 and 2 contested, arguing there was no privity with the plaintiff and that the claim was time-barred. The trial court, without marking documents properly, allowed the attachment, leading to this appeal.
Issues
- Whether a plaintiff, not party to the original sale agreement and having only a subsequent agreement with an intermediary, could claim a charge over immovable property under Section 55(6)(b) of the Transfer of Property Act.
- Whether the trial court was justified in granting attachment before judgment without marking and recording evidence as mandated under Rule 42 of the Civil Rules of Practice.
Petitioners’ Arguments
The appellants (defendants 1 and 2) argued that there was no privity of contract between them and the plaintiff. They had never authorized defendant 3 to enter into a sub-sale agreement or collect consideration. The plaintiff’s agreement (Ext.A2) was with defendant 3 and not with them, and no part of the consideration had reached them.
They further submitted that Ext.A2 was not an assignment of any right or obligation under Ext.A1 (the original agreement), and therefore the plaintiff could not be considered a representative in interest of defendant 3. They relied on the principle that a right coupled with an obligation cannot be assigned without consent of the original contracting party, citing Khardah Co. Ltd. v. Raymon & Co. (India) Pvt. Ltd. and Indu Kakkar v. HSIDC.
They argued that the trial court had committed a grave error in passing an attachment order based on unmarked and unverified documents, and that the plaintiff’s claim was time-barred and without a prima facie basis.
Respondents’ Arguments
Interestingly, the plaintiff himself did not contest the appeal, which the High Court viewed as a lack of bona fides. Instead, defendant 3—who had entered into agreements with both sets of parties—defended the trial court’s order, arguing that the plaintiff was his assignee under Section 15(b) of the Specific Relief Act and was thus entitled to relief.
Citing Supreme Court rulings such as Seema Arshad Zaheer v. MCGM, Shyam Singh v. Daryao Singh, Indira Devi v. Veena Gupta, and Kapilaben v. Ashok Kumar Sheth, it was contended that the benefit of a contract, including the right to repurchase or specific performance, can be assigned unless expressly prohibited.
The respondent also invoked Ahammedkutty v. Sukumaran to claim that even where both parties were at fault, a charge under Section 55(6)(b) for refund of advance consideration could arise.
Analysis of the Law
The Court took a firm view that Ext.A2 did not assign any completed right under Ext.A1. There was no privity or assignment of obligations that would make the plaintiff a representative in interest. It emphasized that in contracts involving mutual obligations, rights cannot be assigned without consent of the promisor.
The Court held that Section 55(6)(b) of the Transfer of Property Act applies only to a “buyer” in a valid transaction. Since the plaintiff was not a party to the agreement with the owners and no payment had been received by them, the plaintiff could not claim any statutory charge over the property.
Precedent Analysis
- Khardah Company Ltd. v. Raymon & Co. (India) Pvt. Ltd.
The Supreme Court held that obligations under a contract are not assignable without consent, while rights may be assigned unless prohibited. - Indu Kakkar v. HSIDC
Reiterated that rights coupled with obligations cannot be transferred without consent. - Kapilaben v. Ashok Kumar Sheth
Affirmed that an assignee must have an interest capable of enforcement unless restricted by the nature of the contract or its terms. - Shyam Singh v. Daryao Singh
Held that specific performance may be granted to a representative in interest or assignee, but only if rights and obligations are clearly transferred. - Indira Devi v. Veena Gupta
Clarified that implied prohibitions cannot restrict assignability unless expressly stated.
The Court distinguished these cases, holding that Ext.A2 was not an assignment in praesenti and the plaintiff had no enforceable right.
Court’s Reasoning
The Court strongly criticized the procedural irregularity by the trial court in not marking documents as per Rule 42 of the Civil Rules of Practice, which rendered the impugned order devoid of clarity.
On merits, the Court held that Ext.A2 was merely an agreement contemplating a future transfer of rights, not an assignment of existing enforceable rights. There was no novation or substitution of parties to the original contract, nor any evidence of consent by the original sellers (defendants 1 and 2).
Since the plaintiff’s claim for specific performance was time-barred and he was not a party to any enforceable contract with the defendants, he could not be considered a “buyer” entitled to charge under Section 55(6)(b) of the Transfer of Property Act.
Conclusion
The Court allowed the appeal and set aside the order of attachment before judgment. It held that:
- The plaintiff had no right to claim a charge over the property.
- Ext.A2 was not a valid assignment.
- The trial court failed to follow mandatory procedures and relied on unmarked documents.
- The interlocutory application was dismissed.
Implications
- Reinforces the principle that only valid contractual parties can claim statutory benefits under property law.
- Affirms that rights under a contract cannot be assigned without compliance with legal and procedural safeguards.
- Highlights the duty of trial courts to follow procedural law in interlocutory applications to ensure fairness and appellate review.
Cases Referred and Their Relevance
- Khardah Co. Ltd. v. Raymon & Co. (AIR 1962 SC 1810): Clarified the non-assignability of obligations under a contract.
- Indu Kakkar v. HSIDC (1999) 2 SCC 37: Confirmed that mutual obligations cannot be unilaterally assigned.
- Shyam Singh v. Daryao Singh (2003) 12 SCC 160: Discussed assignment and specific performance under Section 15(b).
- Kapilaben v. Ashok Kumar Sheth (2020) 20 SCC 648: Interpreted the scope of “representative in interest.”
- Indira Devi v. Veena Gupta (2023) 8 SCC 124: Ruled that assignment can’t be impliedly restricted.
- Ahammedkutty Bran v. Sukumaran (2024 (3) KHC 494): Ruled on charge entitlement when both buyer and seller are at fault.
FAQs
1. Can someone who is not a party to a sale agreement claim a charge over the property?
No. Unless there is a valid assignment of rights and obligations with the consent of the original parties, a non-party cannot claim a charge under Section 55(6)(b) of the Transfer of Property Act.
2. What is required to be a “representative in interest” under Section 15(b) of the Specific Relief Act?
The person must be a lawful assignee of enforceable rights. Mere future promises or conditional agreements do not suffice.
3. What procedural requirement did the trial court fail to comply with?
The trial court did not mark or record documents in accordance with Rule 42 of the Civil Rules of Practice, thereby undermining the legitimacy of the order.
