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1975 Supreme(Ori) 88

High Court Of Orissa
K. B. Panda And P. K. Mohanti, JJ.
SIMANCHAL MAHAPATRO - Appellant
Versus
BUDHIRAM PADHI - Respondent
First Appeal 115  Of  1968
Decided On : 09/29/1975

Advocates Appeared:
G.RATH, H.G.Panda, N.C.PANIGRAHI

A subsequent purchaser is entitled to the benefit of the exception provided under Section 19 (b) of the Specific Relief Act, 1963 only if he is a bona fide purchaser for value, has no notice of the prior contract, and has paid the full consideration money before he had notice of the prior contract.

Headnote:

SPECIFIC PERFORMANCE - CONTRACT OF SALE - BONA FIDE PURCHASER - NOTICE OF PRIOR CONTRACT - SECTION 19 (B) OF THE SPECIFIC RELIEF ACT, 1963 - INTERPRETATION - PAYMENT OF CONSIDERATION MONEY - MEANING AND SCOPE.

Fact of the Case:

Plaintiff entered into a contract of sale with Defendant No. 1 for the purchase of certain lands. Subsequently, Defendant No. 1 sold the same lands to Defendants 2 and 3. Plaintiff filed a suit for specific performance of the contract against Defendants 1, 2, and 3. The trial court decreed the suit in favor of the plaintiff, holding that Defendants 2 and 3 were not bona fide purchasers for value without notice of the prior contract.

Finding of the Court:

The High Court upheld the trial court's decision. It held that Defendants 2 and 3 had notice of the prior contract before they entered into the transaction with Defendant No. 1. The court also held that Defendants 2 and 3 had not paid the full consideration money before they had notice of the prior contract. Therefore, they were not entitled to the benefit of the exception provided under Section 19 (b) of the Specific Relief Act.

Issues: 1. Whether Defendants 2 and 3 were bona fide purchasers for value without notice of the prior contract of sale in favor of the plaintiff? 2. Whether Defendants 2 and 3 had paid the full consideration money before they had notice of the prior contract?

Ratio Decidendi: 1. Section 19 (b) of the Specific Relief Act, 1963 provides that a subsequent purchaser is entitled to the benefit of the exception only if he is a bona fide purchaser for value, has no notice of the prior contract, and has paid the consideration money before he had notice of the prior contract. 2. The court held that Defendants 2 and 3 had notice of the prior contract before they entered into the transaction with Defendant No. 1. The court also held that Defendants 2 and 3 had not paid the full consideration money before they had notice of the prior contract. Therefore, they were not entitled to the benefit of the exception provided under Section 19 (b) of the Specific Relief Act.

Final Decision: The High Court dismissed the appeal filed by Defendants 2 and 3. The trial court's decree for specific performance of the contract was upheld.

MOHANTI, J.

( 1 ) THIS appeal, by defendants 2 and 3, arises out of a suit for specific performance of a contract of sale dated 16-2-1967 executed by defendant No. 1 sobhabati Panigrahi in favour of the plaintiff (respondent No. 1) agreeing to sell the suit lands measuring 5. 17 acres for a sum of Rs. 7,600/ -.

( 2 ) THE plaintiff's case was that the suit lands are situated at a distance of 120 miles from Parlakhemundi where defendant No. 1 ordinarily resides. She desired to dispose of the land and requested her cousin brother Gobinda panigrahi (P. W. 5) to find out a suitable purchaser. On 16-2-1967 sine executed the deed of contract (Ex, 1-D) in favour of the plaintiff on re'ceipt of a sum of Rs. 1,000/- as earnest money and agreed to execute the sale deed by 31-3-1967; but instead of selling the lands to the plaintiff as agreed upon, she executed two sale deeds (Exhibits A-2 and B-2) in favour of defendants 2 and 3 on 17-3-1967. It was alleged that the defendants 2 and 3 are not bona fide purchasers for value and that the sale deeds in their favour were created in order to defeat the rights of the plaintiff. It was further alleged that the plaintiff was all along ready and willing to perform his part of the contract.

( 3 ) DEFENDANT No. 1 filed written statement contending that the plaintiff got the deed of contract executed by her by fraud and misrepresentation and that she became aware of the fraud on receipt of a telegram from D. W. 5 Banamali misra to the effect that he had offered Rs. 9,200/- for the suit lands to the said gobinda Panigrahi. She issued a notice of cancellation of the suit contract calling upon the plaintiff to take refund of the sum of Rs. 1,000/- and then sold the lands to defendants 2 and 3 for valuable consideration.

( 4 ) DEFENDANTS 2 and 3 filed a joint written statement supporting the plea of defendant No. 1 about fraud and misrepresentation. They claimed to have purchased the suit lands for valuable consideration without prior notice of the plaintiff's contract.

( 5 ) THE trial Court on a consideration of the evidence led by the parties held that the contract in favour of the plaintiff was genuine; that D. W. 5 Banamali Misra who acted as agent of defendants 2 and 3 had full notice of the plaintiff's contract before execution of the sale deeds Exts. A-2 and B-2 and that the transferees had not paid the full consideration money. Accordingly it came to the conclusion that defendants 2 and 3 were not entitled to the benefit of the exception as provided under Section 19 (b) of the Specific Relief Act and decreed the plaintiff's suit for specific performance of contract.

( 6 ) THE finding about the genuineness of the plaintiff's contract is not assailed in this appeal. It is supported by ample evidence on record. The question that falls for our consideration is whether the defendants 2 and 3 are bona fide purchasers for value without prior notice of the contract of sale in favour of the plaintiff.

( 7 ) AT this stage it may be convenient to read Section 19 of the Specific Relief act of 1963 so far as it is relevant for our purpose. It runs as follows:

"section 19. Except as otherwise provided by this Chapter, specific performance of a contract may be enforced against - (a) either party thereto; (b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract; xx XX XX XX"

( 8 ) ON a plain reading of the above provision it appears that a subsequent purchaser in order to successfully resist a suit for specific performance of a prior contract of sale must establish that - (a) he is a bona fide purchaser for value, (b) he had no notice of the prior contract, and (c) before he had notice of the prior contract of sale, he paid the consideration money to the owner.

( 9 ) IT is now to be seen whether the appellants have fulfilled the above conditions. On a review of the









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