Recently, the Hon’ble Supreme Court dismissed an appeal challenging a High Court decision related to the specific performance of an unregistered sale deed. The High Court had ruled that the defendants failed to inquire about the property’s title and had suspicious payment details, which indicated possible collusion. The Supreme Court found no error in the High Court's judgment and allowed the plaintiff to proceed with executing the decree.
Brief Facts:
The original plaintiff (Respondent No.1) sought specific performance of an unregistered sale deed dated 12.02.1986 regarding a suit property. The owner of the property (defendant No.1) transferred it to defendants No.2 and No.3 (the appellants) via a sale deed dated 29.08.1986. The plaintiff then filed a suit for specific performance in 1987.
The Trial Court ruled in favour of the plaintiff, but the District Court set aside the decree in the first appeal. The plaintiff filed a Second Appeal in the High Court, which framed the issue of whether the first appellate court had misread evidence, especially regarding the defendants' status as bona fide purchasers under Section 19(b) of the Specific Relief Act, 1963.
The High Court ruled that the defendants were not bona fide purchasers, noting that:
- Defendant No. 2 was related to the original owner.
- They failed to inquire about the title of the property from the plaintiff’s husband, the mortgagee in possession.
- The payment details in the sale deed were inconsistent and suspicious, indicating possible collusion between the parties.
Observation of the Court:
The Court referred to the interpretation of Section 19 of the Specific Relief Act in R.K. Mohammed Ubaidullah v. Hajee C. Abdul Wahab 2000 (6) SCC 402, stating:
“Section 19(b) of the Specific Relief Act, 1963, 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.”
The Court further explained that "Good faith is a question of fact to be considered and decided on the facts of each case". It emphasized that Section 3 of the Transfer of Property Act defines "notice" as including both actual and constructive notice.
The Court noted that "the onus is on the subsequent purchaser to prove that he purchased the property in good faith and also bona fide purchaser for value."
The Court referred to the case Ram Niwas v. Bano, 2000 (6) SCC 685, and cited:
“If the purchasers have relied upon the assertion of the vendor or on their own knowledge and abstained from making inquiry into the real nature of the possession of the tenant, they cannot escape from the consequences of the deemed notice under Explanation II to Section 3 of the Transfer of Property Act.”
The Court also cited Kailas Etc., Works v. Munlity, B. & N., 1968 Bombay Law Reporter 554, emphasizing:
“A person cannot be said to act honestly unless he acts with fairness and uprightness. A person who acts in a particular manner in the discharge of his duties in spite of the knowledge and consciousness that injury to someone or group of persons is likely to result from his act or omission or acts with wanton or wilful negligence in spite of such knowledge or consciousness cannot be said to act with fairness or uprightness and, therefore, he cannot be said to act with honesty or in good faith.”
Finally, the Court referred to Daniels v. Davison [(1809) 16 Ves Jun 249: 33 ER 978], stating:
“where there is a tenant in possession under a lease, or an agreement, a person purchasing part of the estate must be bound to inquire on what terms that person is in possession … that a tenant being in possession under a lease, with an agreement in his pocket to become the purchaser, those circumstances altogether give him an equity repelling the claim of a subsequent purchaser who made no inquiry as to the nature of his possession.”
The decision of the Court:
The Court found no error, let alone any error of law, in the High Court's judgment and order. Therefore, the appeal was dismissed. The plaintiff was allowed to proceed with the execution of the decree passed by the Civil Court. Any pending applications were also disposed of.
Case Title: Manjit Singh & Anr. v. Darshana Devi & Ors.
Citation: Civil Appeal No. 13066 of 2024
Coram: Hon'ble Mr. Justice J.B. Pardiwala and Hon'ble Mr. Justice R. Mahadevan
Advocate for Petitioner: Adv. Vishal Mahajan, Adv. Anil Kumar, Adv. Reena Devi, AOR Vinod Sharma
Advocate for Respondent: Sr. Adv. M.L. Saggar, AOR Tanuj Bagga Sharma, Adv. Armaan Saggar, Adv. M.K. Ravi, AOR Sudarshan Singh Rawat, Adv. Sskhaira, Adv. Sunny Sachin Rawat
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