Court’s Decision
The Supreme Court upheld the decree for specific performance of an agreement to sell agricultural land over 9 acres, executed in 2001, in favour of the plaintiffs. The Court directed the plaintiffs or their legal heirs to deposit an additional ₹25,00,000 within 12 weeks, in addition to the ₹9,00,000 already deposited. The Court also declared the subsequent sale deeds executed by the appellant and the third party (Arun Kalia) as null and void under the doctrine of lis pendens, holding that such transactions were designed to thwart the decree. The Court ordered the Sub-Registrar to update the land records accordingly.
Facts
The matter pertains to agricultural land in Hoshiarpur, Punjab, agreed to be sold by the appellant to the plaintiffs through an Agreement to Sell dated 08.10.2001. The plaintiffs paid ₹1,00,000 as earnest money, with the remaining ₹9,00,000 payable by 31.01.2002. The plaintiffs claimed to have taken possession in November 2001 and filed a suit for specific performance on 20.04.2002, alleging that the seller failed to appear before the Sub-Registrar to execute the sale deed.
During the trial, an order by the Tahsildar dated 22.05.2002 surfaced, recording possession of the land with one Arun Kalia. The seller had, in fact, sold the land to Arun Kalia through two sale deeds dated 29.05.2002, and Arun Kalia later sold the land to others. These transactions occurred after the institution of the specific performance suit.
Issues
- Whether the plaintiffs were entitled to specific performance despite not seeking delivery of possession in the original suit prayer.
- Whether the subsequent sale deeds executed by the appellant and Arun Kalia were valid.
- Whether the plaintiffs demonstrated readiness and willingness to perform the agreement.
- Whether the decree was collusive or fraudulent as alleged by the third-party objectors.
Petitioner’s Arguments
The appellant argued that the plaintiffs had not been ready and willing to pay the balance sale consideration and had wrongly claimed possession in their plaint. It was contended that the land had already been put in possession of Arun Kalia under an oral tenancy agreement, and later sold to him, and then by him to others. The appellant relied on the Tahsildar’s order and the subsequent registered sale deeds to invalidate the decree for specific performance.
The third-party objectors contended that the decree was fraudulent and collusive, executed only to defeat their legitimate possession and title. They claimed tenancy rights and relied upon the Tahsildar’s order certifying possession.
Respondent’s Arguments
The plaintiffs/respondents maintained that they had always been ready and willing to perform their part of the contract. They challenged the genuineness of the tenancy claim made by Arun Kalia, arguing that the so-called oral tenancy agreement was concocted. They further argued that the subsequent sale deeds were executed during the pendency of the specific performance suit and were hit by the doctrine of lis pendens under Section 52 of the Transfer of Property Act.
Analysis of the Law
The Court reiterated the principle that a buyer need not physically tender money to establish readiness and willingness. Such readiness is to be assessed based on conduct and financial capacity. [Nathulal v. Phoolchand (1969) 3 SCC 120; Sukhbir Singh v. Brij Pal Singh (1997) 2 SCC 200].
Further, the Court observed that failure to plead delivery of possession in the plaint is not fatal, especially when the agreement to sell itself implied such a clause, and relief could be granted under Section 22 of the Specific Relief Act, 1963. [Babu Lal v. Hazari Lal Kishori Lal (1982) 1 SCC 525].
Precedent Analysis
- Nathulal v. Phoolchand (1969) 3 SCC 120 – Cited to explain that actual tendering of money is not required to establish readiness and willingness.
- Sukhbir Singh v. Brij Pal Singh (1997) 2 SCC 200 – Relied upon for the same principle.
- His Holiness Acharya Swami Ganesh Dassji v. Sita Ram Thapar (1996) 4 SCC 526 – Used to support the inference of readiness from conduct.
- Bibi Jaibunisha v. Jagdish Pandit (1997) 4 SCC 481 – Reiterated the conduct-based test.
- Babu Lal v. Hazari Lal Kishori Lal (1982) 1 SCC 525 – Relief of possession may be granted even if not specifically pleaded.
- Kanshi Ram v. Om Prakash Jawal (1996) 4 SCC 593 – Increase in land prices not a ground to deny specific performance.
- Gobind Ram v. Gian Chand (2000) 7 SCC 548 – Confirmed that escalation of prices post-agreement is no bar to specific performance.
Court’s Reasoning
The Court noted glaring inconsistencies in the appellant’s version about his presence at the Sub-Registrar’s office on the due date. He also failed to disclose the tenancy agreement and the subsequent sale deeds in his written statement, revealing them only during the trial. This pointed to suppression and mala fides.
The Court found the alleged oral tenancy and subsequent sale to Arun Kalia suspicious, collusive, and designed to defeat the decree. The third-party objectors had knowledge of the suit but remained silent until execution proceedings were initiated. Their claim was held to be without merit.
It also held that the sale deeds executed during the pendency of the specific performance suit were void under Section 52 of the Transfer of Property Act.
Conclusion
The Supreme Court upheld the decree of specific performance, affirming that the plaintiffs were entitled to the land as per the 2001 agreement. The Court directed them to deposit an additional ₹25,00,000 within 12 weeks. The sale deeds in favour of Arun Kalia and his successors were declared null and void. The Court vacated all interim orders and directed the Sub-Registrar to update the records under Section 31(2) of the Specific Relief Act, 1963.
Implications
This judgment is significant in reinforcing the sanctity of contracts for sale and the doctrine of lis pendens. It shows that mala fide transactions executed during litigation will be nullified, regardless of registration. It also clarifies that relief of possession can be granted even if not expressly prayed for, ensuring substantive justice.
Referred Judgments and Their Relevance
- Nathulal v. Phoolchand – Readiness not dependent on carrying actual money.
- Babu Lal v. Hazari Lal Kishori Lal – Relief of possession can be granted even if not expressly prayed for.
- Kanshi Ram v. Om Prakash Jawal – Price escalation not a valid defence.
- Sukhbir Singh v. Brij Pal Singh – Inferred readiness through conduct.
- Gobind Ram v. Gian Chand – Contract enforceable despite delay if no fault of the buyer.
- His Holiness Acharya Swami Ganesh Dassji – On conduct-based test of readiness.
FAQs
1. Can a buyer claim possession in a specific performance suit even if not pleaded in the plaint?
Yes. The Court held that under Section 22 of the Specific Relief Act, relief of possession may be granted even if not specifically sought, as long as justice demands it.
2. Are sale deeds executed after the filing of a specific performance suit valid?
No. Such transactions are hit by Section 52 of the Transfer of Property Act and are void under the doctrine of lis pendens, as reaffirmed by the Supreme Court in this case.
3. Does an increase in land prices justify denying specific performance of an old contract?
No. The Court categorically held that escalation in land prices cannot be a ground to deny specific performance once the other party has fulfilled their obligations.