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2026 Supreme(Mad) 1385
IN THE HIGH COURT OF JUDICATURE AT MADRAS
R. SAKTHIVEL, J.
M. Sathish Kumar, S/o. S. Mani - Appellant
Versus
R. Veeran, (Died) – Respondent
Appeal Suit No.603 of 2019
Decided On : 10-04-2026
For the Appellant : Mr. T. Murugamanickam, Senior Counsel Assisted by Ms. Zeenath Begum.
A party can enforce assigned rights in a contract even if the contract is void for public policy, as long as the payments made are not unlawfully derived.
Headnote:(A) Code of Civil Procedure, 1908 - Section 96 - Specific Performance - Plaintiff sued for specific performance of sale agreements executed for sale of property, which were allegedly aimed to evade stamp duty - The trial court found agreements void due to being against public policy, though the plaintiff was entitled to refund of advance paid. The appeal court found the trial court's decision erroneous regarding the refund amount of Rs.2,00,000/- and held that the plaintiff is entitled to recover Rs.17,00,000/- with interest. (Paras 24, 26)
(B) Legal Principle - The doctrine of privity of contract allows a third party to enforce rights if there is an assignment without implied prohibition against it, despite contracts being void for public policy. (Para 14)
Facts of the case:
The original defendant had entered into two sale agreements with varying sale prices and subsequently received substantial advance payments from the plaintiff's assignor, with the plaintiff seeking specific performance after assignment of rights. However, the trial court deemed one agreement void for evasion of stamp duty.
Findings of Court:
The appellate court reversed the trial court on refund of the advance and concluded the entirety of payments made (Rs.17,00,000/-) were backed by valid receipt evidence.
Issues: The case addressed the right to enforce agreements post-assignment, credibility of paid receipts, the legality of agreements under public policy, and the plaintiff’s entitlement to specific performance.
Ratio Decidendi: The court held the plaintiff's assignment of contract rights valid, entitling him to recover undelivered payments, differentiating between the transactions being lawful versus the contracts being void.
Result: Appeal allowed in part; the plaintiff entitled to recover Rs.17,00,000/-.
| Table of Content |
|---|
| 1. factual background of the case. (Para 1 , 2 , 3 , 4 , 5 , 6) |
| 2. arguments presented by the appellant. (Para 11 , 12 , 13) |
| 3. discussion on contract assignment and privity. (Para 14 , 15 , 16) |
| 4. court's analysis of payment proofs and contract legality. (Para 19 , 20 , 21 , 22) |
| 5. final conclusion on appeal outcome. (Para 26) |
JUDGMENT :
R. SAKTHIVEL, J.
Feeling aggrieved by the Judgment and Decree dated August 16, 2018 passed in O.S. No.163 of 2004 by 'the III Additional District Court, Salem' ['Trial Court' for brevity], the plaintiff therein has filed this Appeal Suit under Section 96 read with Order XLI Rule 1 of 'the Code of Civil Procedure, 1908 ' ['CPC' for short].
2. For the sake of convenience, hereinafter, the parties will be referred to as per their array in the Original Suit.
3. Originally, the aforesaid Suit was filed by M.Sathish Kumar as plaintiff, against R.Veeran as original defendant. The original defendant passed away on December 26, 2010 during the pendency of the Suit. Therefore, his legal heirs were brought on record as defendants 2 to 5 in the Suit vide Order dated January 5, 2012 made in I.A. No.283 of 2011 and vide Order dated June 18, 2013 made in I.A. No.406 of 2013 in O.S.No.163 of 2004 by the Trial Court.
PLAINTIFF'S CASE
4. The Suit Properties, totally measuring about 8 Acres, are the self-acquired and absolute properties of the original defendant - R.Veeran. One Sivaraman and the original defendant entered into a registered Sale Agreement dated January 6, 2003 whereby the original defendant agreed to sell the suit properties to the said Sivaraman for a sale consideration of Rs.4,00,000/- (Rupees Four Lakhs Only). Rs.50,000/- (Rupees Fifty Thousand Only) per acre was fixed as the sale price. On the date of Sale Agreement, Sivaraman paid Rs.2,00,000/- (Rupees Two Lakhs Only) to the original defendant as advance and the remaining sale consideration was agreed to be paid before May 14, 2003. Upon receipt of the remaining sale consideration, the original defendant had to execute the Sale Deed in favour of Sivaraman or his nominees in respect of the Suit Properties free from all encumbrances after having measured out the same with the help of a qualified surveyor and deliver possession of the same.
4.1. On the same day as the registered Sale Agreement i.e., January 6, 2003, the original defendant and the Sivaraman simultaneously entered into another Sale Agreement, which is an un-registered one, in respect of the same properties viz., Suit Properties. As per the unregistered Sale Agreement, the original defendant agreed to sell the Suit Property to Sivaraman at the rate of Rs.2,82,000/- per Acre. The other terms and conditions embodied in unregistered Sale Agreement are almost same as stated in the registered Sale Agreement.
4.2. Though in both the Sale Agreements, it is recited that Rs.2,00,000/- was paid as advance on the same day of execution, the said amount was paid only once and not twice. The above said two Sale Agreements are not in conflict with each other. They are supplementary and complementary to each other.
4.3. Subsequently, on February 5, 2003, the original defendant received Rs.6,00,000/- (Rupees Six Lakhs Only) from Sivaraman for his urgent family and Court expenses in the presence of witnesses and gave receipt for the same in favour of Sivaraman, and the same was paid as a part of the sale consideration. Again on April 3, 2003, the original defendant received Rs.9,00,000/- (Rupees Nine Lakhs Only) as part sale consideration in the presence of witnesses. Thus, the original defendant totally received Rs.17,00,000/- towards part payment of the sale consideration and in turn, delivered possession of the Suit Properties to Sivaraman.
4.4. In the meantime, on April 21, 2003, the plaintiff paid Rs.17,00,000/- to Sivaraman and both the Sale Agreements were assigned / made over to the plaintiff. Possession was also delivered to the plaintiff on the same day by Sivaraman. Soon after the assi
