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2022 Supreme(SC) 101

SUPREME COURT OF INDIA
(From the High Court of Karnataka at Bengaluru)
K.M. JOSEPH, PAMIDIGHANTAM SRI NARASIMHA, JJ.
G.T. Girish – Appellant
Versus
Y. Subba Raju (D) By Lrs And Another – Respondent
Civil Appeal No. 380, 381 of 2022 [@ Special Leave Petition [C] No. 6857, 6858 of 2017]
Decided on : 18-01-2022

Advocates appeared:
For the Petitioner(s): Mrs. Kirti Renu Mishra, AOR Ms. Kiran Suri, Sr. Adv. Mr. S.J. Amith, Adv. Mr. Krishna Kumar, Adv. Dr. (Mrs. ) Vipin Gupta, AOR
For the Respondent(s): Ms. Pritha Srikumar, AOR Ms. Mansi Binjrajka, Adv. Mrs. Kirti Renu Mishra, AOR

Headnote:(A) Specific Relief Act, 1963 - Section 23 - Transfer of Property Act, 1882 - Section 52 - Suit for specific performance dismissed as the agreement contravened legal provisions and was deemed unenforceable - The plaintiff's prior agreement for site was prohibited under law due to ongoing lease and non-alienation clause of ten years, rendering suit filed prior to expiration of that period wholly premature. (Paras 26, 71, 78, 112, 114)

(B) Doctrine of lis pendens observed - The sale of property during pending litigation rendered ineffective against plaintiff’s purported claim, as the second defendant lacked bona fide purchaser status being aware of encumbrances against property under ongoing lawsuits. (Paras 92, 101, 102)

Facts of the case:
The appellant formed part of the defendants in a suit for specific performance initiated by the plaintiff regarding an agreement dated November 17, 1982, concerning a property allotted by the Bangalore Development Authority. The first defendant had died before execution, complicating the ownership and conveyance of said property. As of April 2016, title was involved in a chain of transactions with claims of notice and breach of agreements intertwined. (Paras 3, 4, 25, 34)

Findings of Court:
Court decreed dismissal of the specific performance claim based on the determination that the agreement contravened a statutory prohibition under the Transfer of Property Act, making it non-enforceable by law. Fair compensation awarded to plaintiff was resolved in the judgment. (Paras 113, 114)

Issues: Primary issues revolved around legality and relevance of the initial contract, fulfillment of obligations under the Statutory Rules, and whether the appellants could transfer rights given pendency of litigation. (Paras 112, 113)

Ratio Decidendi: The Court emphasized that enforcing an agreement which blatantly violates statutory obligations established under the Transfer of Property Act is impermissible, regardless of the intentions of the contracting parties. It stressed that the plaintiff's non-compliance with legal requirements negated his case for specific performance. (Paras 69, 110, 111)

Result: Appeals allowed, High Court judgment set aside, Suit dismissed but directed appellants to compensate plaintiff. (Para 114)

Table of Content
1. factual background of the property dispute. (Para 3)
2. trial court's decision on specific performance. (Para 4)
3. contention on maintainability of the suit. (Para 6)
4. defendant's arguments against the validity of the agreement. (Para 7)
5. legal framework of the property law pertinent to the case. (Para 8 , 9 , 10 , 11)
6. implications of the lessee and tenant relationship. (Para 27)
7. summary of correspondence leading to the suit. (Para 34)
8. summary of trial court findings. (Para 46)
9. conclusion on the enforceability of the agreement. (Para 112)
10. final decision and order of the court. (Para 113 , 114)

JUDGMENT :

K.M. JOSEPH, J.

1. Leave granted.

2. The appellants are defendant 1(a), defendant 1(b) and second defendant in a Suit filed for specific performance. Defendant 1(a) and Defendant 1(b) have filed SLP(C)No.6858 of 2017 while defendant No.2 has filed SLP(C)No.6857 of 2017. The Trial Court while refusing specific performance, directed the return of the amount paid by the plaintiff under the contract. By the impugned judgment, the High Court allowed the plaintiffs appeal and directed the appellants to execute the sale deed relating to the plaint schedule property in favour of the plaintiffs (legal representatives of original plaintiff). The parties will be hereinafter referred to by their status in the Trial Court.

A BRIEF OVERVIEW OF FACTS

3. On 04.04.1979, the plaint schedule property, which consisted of a site, was allotted to the first defendant (since deceased), by the Bangalore Development Authority (hereinafter referred to as, ‘the BDA’). Based on the allotment, a lease-cum-sale agreement was entered into between the BDA and the first defendant on 04.04.1979. The first defendant was put in possession on 14.05.1979. On 17.11.1982, the first defendant entered into the agreement with the plaintiff agreeing to execute the sale deed of the site within three months from the date on which, the plaintiff obtained the sale deed from the BDA. On 01.03.1983 and 26.04.1984, the plaintiff issued letters to the first defendant, calling upon her to execute the sale deed. The first defendant issued letter dated 08.05.1984, intimating that the plaintiff was in breach. The agreement itself had lapsed and the advance amount by the plaintiff was forfeited. After issuing Notice on 14.02.1985, the plaintiff instituted the Suit in question, seeking specific performance. The first defendant, after filing Written Statement on 14.08.1986, died pending the Suit, on 18.07.1994. The plaintiff impleaded the husband of the defendant as Defendant-1(a). A sale deed came to be executed by the BDA in favour of the son of defendant no.1 and defendant-1(a), on 19.06.1996. Thereafter, the son executed sale deed of the plaint schedule property in favour of the second defendant. It is further not in dispute that the son of the first defendant and defendant-1(a) was impleaded as defendant-1(b) in the Suit in the year 1997. The second defendant came to be impleaded as second defendant in the Suit in the year 1997. Both the defendant-1(b) and second defendant filed Written Statements.

4. The Trial Court did not decree the suit for specific performance but directed return of Rs.50,000/- with 9 per cent interest. The High Court found that the Suit is maintainable. It was further found that the second defendant is not a bonafide purchaser for value without notice of the Agreement to Sell dated 17.11.1982. It was further found by the High Court that, the alienation made in favour of the second defendant, was hit by the provisions of Section 52 of the Transfer of Property Act, 1882. Answering the point, whether the plaintiff was entitled to the relief of specific performance, it was found that, in the facts, when the entire sale consideration was paid by the plaintiff to the first defendant, nothing more remained to be done by the plaintiff,

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