IN THE HIGH COURT OF JUDICATURE AT MADRAS
V. Ramaswami, J.
Chinna Vanan .....Appellant(s)
Versus
Alamelu and others .....Respondent(s)
S.A. No. 68 of 1970.
Decided On : 26 July 1974
2. The property in question originally belonged to one Chenni Vannan, the father of plaintiff 6 to 8 and grand father of plaintiffs 2 to 5. The first plaintiff is the daughter-in-law of the said Chenni Vannan. This Chenni Vannan entered into an agreement to sell with the first defendant on 7th April, 1949. Under the same document, the first defendant also agreed to reconvey the property within a period of seven years on the terms and conditions contained therein. The first defendant sold the property on 20th September, 1954 before the expiry of the said period of seven years to one Pappa Naicker with an agreement that the said Pappa Naicker will reconvey the property to the first defendant within a period of three years. Chenni Vannan subsequently purchased the property directly from Papa Naicker on 1st August, 1957 . The first defendant filed a suit O. S. No. 737 of 1957 on the file of the Court of the District Munsif, Erode against Pappa Naicker for specific performance of the agreement to sell dated 20th September, 1954. Pappa Naicker in this suit filed a written statement contending that he had already sold the property to Chenni Vannan and that the purchaser Chenni Vannan is a necessary party to the suit. In spite of this defence, the first defendant did not implead Chenni Vannan as a party to O. S. No. 737 of 1957. The suit itself was decreed in 1963 and in execution of the decree, a sale deed was executed in favour of the first defendant. A certificate of possession was also given to the first defendant. It has now been found by both the Courts below that the purchase by Chenni Vannan on 12th August, 1957, was with the knowledge of the agreement of reconveyance executed by Pappa Naicker to the first defendant. It has also been found by the lower appellate Court that though a sale deed was executed in pursuance of the decree in O. S. No. 737 of 1937, the possession given under that sale deed was only a symbolic possession and the actual possession of the property continued with Chenni Vannan.
3. The learned counsel for the appellant contended that since he has obtained a decree for specific performance against Pappa Naicker, the vendor of Chenni Vannan and obtained a sale deed in execution of the same, the plaintiff is not entitled to the declaration and injunction prayed for in the suit. The question for consideration is whether this submission is acceptable.
4. A contract for sale of immoveableproperty does not create any interest in such immoveable property. Therefore the vendor could enter into a sale transaction with a third party and confer absolute title on him in spite of the agreement to sell. As between the subsequent purchaser and his vendor, there is a valid transfer of ownership and the title is conveyed to the subsequent purchaser. But if the purchase by the third party was with the knowledge of the agreement to sell, he will hold the property subject to the obligation under section 91 of the Indian Trust Act, 1882. This sec-tion provides that where a pel-son acquires property with notice that another person has entered into an existing contract affecting that property, of which specific performance could be enforced the former must hold the property for the benefit of the latter to the extent necessary to give effect to the contract. Thus, the obligation of holding it as a trustee is only to the extent necessary to give effect to the contract. It does not affect the passing of the title. In other words even where section 91 of the Act is applicable the transaction of sale is not made void, but the subsequent purchaser is under an obligation to convey the proper
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