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1993 Supreme(AP) 127
Andhra Pradesh High Court
Judges : P.RAMAKRISHNAM RAJU
Ravada Krishna Rao - Appellant
Versus
Pasupureddy Ananda Rao - Respondent
Decided On : 03-12-93
The subsequent transferee is not automatically entitled to the balance of sale consideration simply because he has paid a sum to the vendors under the registered sale deed. The court should consider the equities of the case and decide who is entitled to the balance of sale consideration.
Headnote:
CIVIL PROCEDURE CODE, 1908 - ORDER 23 RULE 3 - COMPROMISE DECREE - BINDING ON PARTIES - SUBSEQUENT TRANSFEREE NOT A PARTY TO COMPROMISE DECREE - NOT BOUND BY ITS TERMS - BALANCE OF SALE CONSIDERATION - ENTITLEMENT - VENDORS OR SUBSEQUENT TRANSFEREE - EQUITIES TO BE CONSIDERED - ISSUE TO BE FRAMED AND DECIDED.
Fact of the Case:
Plaintiff filed a suit for specific performance of an agreement of sale against vendors and a subsequent transferee. During the pendency of the suit, one of the vendors died and her son and daughter were brought on record as defendants. The suit was decreed in favor of the plaintiff, directing the defendants to execute a registered sale deed in his favor upon receiving the remaining sale consideration. The subsequent transferee filed an appeal against the decree, which was later compromised between him and the plaintiff. As per the compromise, the subsequent transferee agreed to give up his contentions in the appeal and deliver possession of the property to the plaintiff, while the plaintiff agreed to withdraw the balance of sale consideration deposited by the subsequent transferee, considering that he had already paid a sum to the vendors under a registered sale deed. The vendors were not parties to this compromise.
Finding of the Court:
The court held that the compromise decree was not binding on the vendors since they were not parties to it and had not signed the compromise petition. However, the court also held that the subsequent transferee was not automatically entitled to the balance of sale consideration simply because he had paid a sum to the vendors under the registered sale deed. The court noted that the subsequent transferee was not a bona fide purchaser for value without notice of the prior agreement of sale, and that the sale in his favor was voidable at the option of the prior purchaser.
Issues: 1. Whether the compromise decree was binding on the vendors? 2. Who was entitled to the balance of sale consideration - the vendors or the subsequent transferee?
Ratio Decidendi: 1. A compromise decree is binding only on the parties who have signed the compromise petition. 2. In cases of registered sale deeds executed subsequent to a prior agreement of sale, the subsequent purchaser is not automatically entitled to the balance of sale consideration. The normal rule is that the vendor alone is entitled to the balance of sale consideration, subject to any equities in favor of the subsequent purchaser. 3. The subsequent purchaser may be entitled to equities if he has paid a sum to the vendor under the registered sale deed and is not a bona fide purchaser for value without notice of the prior agreement of sale. 4. The court should frame an issue and decide whether the subsequent purchaser is entitled to any equities, considering relevant evidence and the objection of unjust enrichment by the vendors.
Final Decision: The court allowed both civil revision petitions, set aside the order of the lower court, and remanded the matter back to the trial court for fresh disposal. The trial court was directed to frame an issue and decide whether the subsequent purchaser was entitled to any equities in the case, considering relevant evidence and the objection of unjust enrichment by the vendors.
( 1 ) THESE two Civil Revision Petitions arise out of a common order disposing of e. A. No. 215/85 and E. A. No. 167/85, two applications filed by the petitioners and the first respondent respectively, claiming balance of sale consideration deposited by the plaintiff.
( 2 ) ONE Thota Sambamurthy (hereinafter called as the plaintiff) filed o. S. No. 18/77 on the file of the Subordinate Judge s Court, Parvatipuram for specific performance of an agreement of sale dated 2-11-1976 against Revada krishna Rao, his wife Revada Adilakshmamma (hereinafter called as vendors) and one Pasupureddi Ananda Rao, first respondent in these Civil Revision petitions (hereinafter called as the subsequent transferee ). Pending the said suit, Adilakshmamma died and her son and daughter were brought on record as defendant Nos. 4 and 5 who are the respondent Nos. 3 and 4 in the C. R. Ps. The suit was decreed against the defendants directing them to execute a registered sale deed in favour of the plaintiff within two months from the date of the decree by receiving the remaining sale consideration from the plaintiff. Although the decree sounds that the balance of sale consideration should be received by the vendors, but no specific issue was framed and decided about the entitlement of this amount by working out equities between the vendors and the subsequent transferee. Be that as it may. Aggrieved by the said decree, the subsequent transferee filed A. S. No. 10/84 on the file of the District Judge s Court, vizianagaram. The vendors remained ex parte. However, the subsequent transferee and the plaintiff entered into a compromise in I. A. 462/84. As per the terms of the compromise decree, the subsequent transferee has agreed to give up his contentions as appellant in the appeal and deliver possession of the plaint schedule property to the plaintiff and the plaintiff agreed for withdrawal of the amount of Rs. 7,100/- deposited by him being the balance of sale consideration by the subsequent transferee in view of the fact that he had paid a sum of rs. 6,000/- by way of sale consideration under the registered sale deed dated 13-4-1977 to the vendors. The vendors are not parties to this compromise.
( 3 ) AFTER the said compromise was recorded, both the vendors as well as subsequent transferee filed E. A. 167/85 and 215/85 respectively, before the trial court for issuance of a cheque for Rs. 7,100/- in their favour being the balance of sale consideration claiming that they are alone entitled to. The trial Court by acommonorder dated 31-12-1985 allowed E. A. No. 215/85 filed by the subsequent transferee and dismissed E. A. 167/85 filed by the vendors. Aggrieved by the said common order, the first vendor (D-1) filed the above two revisions. He died pending revision petitions and therefore, petitioner Nos. 2 to 6 are brought on record as the legal representatives of the first petitioner.
( 4 ) SRI T. Gopalakrishna, learned Counsel for the petitioners, contended before me that inasmuch as the vendors are not parties to the compromise decree, the same is not binding on them and as such, the subsequent transferee cannot withdraw the amount in pursuance of the terms of the compromise decree as the balance of sale consideration was meant for the vendors under the decree of the trial Court. He further contended that the trial Court has categorically found that the subsequent transferee is not a bona fide purchaser for valuable consideration without notice of the suit agreement. Though the subsequent transferee as D. W. 1 stated that a sum of Rs. 2,000/- was paid in cash before the Sub-Registrar and the remaining consideration of Rs. 4,000/- went in discharge of the mortgage debt, the recitals in the sale deed, Ex. B-1 strike a different note as if the entire consideration of Rs. 6,000/- was paid even before the execution of the sale deed. There is also no proof that any amount was paid before the Sub-Registrar at the time of registration of the s
