2014 Supreme(Del) 179

High Court of Delhi
THE HONOURABLE MR. JUSTICE RAJIV SAHAI ENDLAW
Sushil Kumar Bagga
Versus
Dewan Chander Batra & Another
RFA No. 268 of 2010
Decided On : 20-01-2014

Headnote:

The court held that the subsequent purchaser, appellant, was not a bona fide purchaser for value without notice prior to the Agreement to Sell and is not entitled to challenge the readiness and willingness of the respondent. The court further held that the principle of lis pendens applies to the sale deed executed during the pendency of the suit, even if the agreement to sell was prior to the institution of the suit. The court also held that the appellant failed to prove that he had paid money, if any, in good faith and without notice of the original contract.

Fact of the Case:

The respondent filed a suit for specific performance of an Agreement to Sell dated 16th September, 1985, by the appellant's predecessor-in-interest in favour of the respondent with respect to property No.198/17A, Garhi, East of Kailash, New Delhi. The appellant was impleaded as a defendant in the suit inter alia pleading that the property had been sold to him vide Agreement to Sell dated 16th June, 1986 and subsequently a Sale Deed was also registered in his favour on 9th March, 1999.

Finding of the Court:

The court found that the respondent was ready and willing to perform his part of the agreement and that the appellant was not a bona fide purchaser for value without notice prior to the Agreement to Sell. The court also found that the principle of lis pendens applies to the sale deed executed during the pendency of the suit, even if the agreement to sell was prior to the institution of the suit. The court further found that the appellant failed to prove that he had paid money, if any, in good faith and without notice of the original contract.

Issues: 1. Whether the respondent was ready and willing to perform his part of the agreement? 2. Whether the appellant was a bona fide purchaser for value without notice prior to the Agreement to Sell? 3. Whether the principle of lis pendens applies to the sale deed executed during the pendency of the suit, even if the agreement to sell was prior to the institution of the suit? 4. Whether the appellant proved that he had paid money, if any, in good faith and without notice of the original contract?

Ratio Decidendi: 1. The court held that the respondent was ready and willing to perform his part of the agreement based on the following factors: - The respondent had admitted the execution of the agreements for extension of time for completion of sale from 31st December, 1985 to 31st March, 1986 and thereafter to 30th April, 1986. - The respondent had not challenged the positive assertions made by the appellant in his examination-in-chief of the reason for extension being the request of the respondent. - The respondent had sent a letter dated 27th April, 1986 by UPC and since the same was addressed at the correct address of the respondent, there was presumption of service. - The readiness and willingness of the respondent to perform his part of the Agreement was evident from the said letter. - The conduct of the respondent of issuing the reminder dated 13th May, 1986 referring to the previous letter dated 27th April, 1986 also showed that the respondent had the requisite funds to pay the balance sale consideration. - The respondent had admitted receipt on 17th/18th May, 1986, of letter dated 13th May, 1986 and had further admitted that she thereafter did not ask the respondent to pay the money or offer to execute the Sale Deed. - The conduct of the respondent of not replying to the letter dated 13th May, 1986 demonstrated that the respondent was not ready to honour her commitment and that she was the unwilling party. - The respondent had promptly replied on 19th May, 1986 itself to the notice dated 14th May, 1986 of cancellation of the Agreement to Sell which also shows the willingness of the respondent. 2. The court held that the appellant was not a bona fide purchaser for value without notice prior to the Agreement to Sell based on the following factors: - The appellant had not filed the documents of sale or copies thereof executed in favour of the appellant and others and it was only in the year 1994 when the respondent attempted to file certain documents but which was not permitted. - Though the respondent had pleaded sale in favour of the appellant and four others but the possession letter dated 28th March, 1986 filed by the appellant was of delivery of possession to one Sh. Vinod Kumar Bagga only who was not the purchaser as pleaded by the respondent. - The said possession letter further recorded the Agreement to Sell dated 16th June, 1986 to be with the said Sh. Vinod Kumar Bagga only. - The said possession letter also mentions a General Power of Attorney (GPA) dated 18th June, 1986 having been executed by the respondent in favour of the said Sh. Vinod Kumar Bagga. - The said possession letter thus contradicted the claim of the appellant and respondent of sale to the appellant and Sh. Brij Bhushan Bagga, Sh. Naresh Kumar Bagga and Mrs. Raj Rani and the said discrepancy had remained unexplained. - None of the aforesaid persons had also been examined in the evidence to prove the sale if any of 16th June, 1986. - Even if the Agreement to Sell dated 16th June, 1986 were to be believed as genuine, the same did not transfer the ownership of the suit property and thus the appellant and the respondent had failed to prove that the property was sold before filing of the suit. - The alleged Agreement to Sell dated 16th June, 1986 and subsequent Sale Deed dated 9th March, 1999 were mentioned for the first time in the application for impleadment filed by the appellant. - Thus, the claim of sale of the property before filing of the suit was difficult to believe. 3. The court held that the principle of lis pendens applies to the sale deed executed during the pendency of the suit, even if the agreement to sell was prior to the institution of the suit based on the following factors: - The Sale Deed dated 9th March, 1999 was for a sale consideration of Rs.1,60,000/- and does not contain any mention of the Agreement to Sell dated 16th June, 1986 or of the transaction being a family arrangement. - It was accordingly held that the respondent had colluded with the appellant and transferred the suit property during the pendency of the lis and the appellant was not a bona fide purchaser without notice and for consideration. 4. The court held that the appellant failed to prove that he had paid money, if any, in good faith and without notice of the original contract based on the following factors: - The appellant had not proved that he had paid money if any in good faith and without notice of the original contract. - The Agreement to Sell dated 16th June, 1986 is for a consideration of Rs.60,000/- and consideration under the Sale Deed is of Rs.1,60,000/-. - The appellant prior to the execution of the Sale Deed admittedly knew not only of the prior Agreement to Sell in favour of the appellant but also of the pendency of the suit. - The payment by the appellant of Rs.1,60,000/- cannot thus be said to be in good faith and without notice of the original agreement.

Final Decision: The appeal was dismissed with costs. Counsel's fee was assessed at Rs.25,000/-.