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2007 Supreme(All) 1387
DILIP GUPTA, J.
Ram Prakash
Versus
Baddal Husain.
S. A. No. 1379 of 1977
Decided On : 4-5-2007.
K. G. Srivastava, Ranjan Srivastava and P. K. Tiwari, for Appellant; M. A. Qadeer, Ramendra Asthana and Manjarul Islam for Respondents.
The main legal point established in the judgment is the significance of the transferee's knowledge of the original contract in determining the validity of a sale under Section 19 (b) of the Specific Relief Act, 1963.
Headnote:
Specific Performance - Agreement to Sell - Specific Relief Act, 1963 - Section 19 - [Specific Performance] - [Agreement to Sell] - [Section 19 (b) of the Specific Relief Act, 1963] - The court discussed the crucial point of whether the defendant No. 2 was a bona fide purchaser for value and without notice, as it would determine the decree of specific performance. The court referred to Section 19 (b) of the Specific Relief Act, which provides that a suit for specific performance shall not be decreed where the transferee for value has paid his money in good faith and without notice of the original contract. The court cited the case law and emphasized the importance of the transferee's knowledge of the original contract in determining the validity of the sale. The court ultimately held that defendant No. 2 was a bona fide purchaser for value and had no notice of the agreement dated 22-3-1975, thus the suit for specific performance could not be decreed.
Fact of the Case:
The plaintiff filed a suit for specific performance of an agreement for sale of a house, alleging that the defendant No. 1 evaded execution of the sale-deed and collusively executed a sale-deed in favor of defendant No. 2. The Trial Court dismissed the suit, but the Lower Appellate Court allowed the appeal and decreed specific performance.
Finding of the Court:
The court found that defendant No. 2 was a bona fide purchaser for value and without notice of the original contract, thus the suit for specific performance could not be decreed.
Issues: The issues included whether defendant No. 1 executed the agreement to sell in favor of the plaintiff, whether defendant No. 1 executed an agreement to sell in favor of defendant No. 2, and whether defendant No. 2 was a bona fide purchaser for value and without notice.
Ratio Decidendi: The court's decision was influenced by the interpretation of Section 19 (b) of the Specific Relief Act, 1963, which provides that a suit for specific performance shall not be decreed where the transferee for value has paid his money in good faith and without notice of the original contract. The court emphasized the importance of the transferee's knowledge of the original contract in determining the validity of the sale.
Final Decision: The Second Appeal was allowed, the judgment and decree of the Lower Appellate Court were set aside, and that of the Trial Court was restored. The parties were to bear their own costs.
ORDER :- This Second Appeal has been filed by defendant No. 2 for setting aside the judgment and decree passed by the learned Vth Additional District Judge, Shahjahanpur whereby the Civil Appeal, that had been filed for setting aside the judgment and decree passed by the learned IIIrd Additional Munsif, Shahjahanpur dismissing the Suit of the plaintiff for specific performance, has been allowed.
2. The Original Suit had been filed for decree of specific performance with the allegation that the agreement for sale was made between the plaintiff and defendant No. 1 Imami on 22-3-1975 for transfer of 3/4th share in the house for a sum of Rs. 1000/-; that the defendant No. 1 received the entire amount and the sale-deed was to be executed by 22-3-1976; that possession was also handed over to the plaintiff and even though the plaintiff has always been ready and willing to execute the sale-deed but defendant No. 1 evaded the execution and ultimately a Registered notice was sent by the plaintiff to defendant No. 1 on 1-9-1975 fixing 15-9-1975 for execution of the sale-deed; that defendant No. 1 without the knowledge of the plaintiff, executed a sale-deed in favour of defendant No. 2 on 9-9-1975 about which the plaintiff came to know on 22-9-1975 and that the said sale-deed was collusive and without consideration.
3. Defendant No. 1 Imami admitted the execution of the agreement to sell in favour of the plaintiff and also the receipt of Rs. 1000/- towards the sale consideration but contended that defendant No. 2 Ram Prakash fraudulently obtained the sale-deed on 9-9-1975 from him. Defendant No. 2 also filed a written-statement alleging that on 12-10-1974 defendant No. 1 had already executed an agreement to sell in his favour for transferring the house for a sum of Rs. 2000/- and had received a sum of Rs. 1500/- as earnest money and balance amount of Rs. 500/- on 9-9-1975 when the sale-deed was executed in his favour by defendant No. 1. It was also alleged that the agreement to sell that had been set up by defendant No. 1 with the plaintiff who was his nephew was collusive and a fictitious transaction.
4. The Trial Court held that the agreement to sell said to have been executed by defendant No. 1 in favour of the plaintiff was a fictitious transaction and the agreement to sell dated 12-10-1974 executed by defendant No.1 in favour of defendant No. 2 and the subsequent sale-deed executed by defendant No. 1 in favour of defendant No. 2 which was registered on 9-9-1975 were genuine transactions and defendant No. 2 was a bona fide purchaser for value without notice. The suit was, accordingly, dismissed.
5. The Lower Appellate Court, however, recorded contrary findings that defendant No.1 executed the agreement to sell on 22-3-1975 in favour of the plaintiff for transferring the disputed house to the plaintiff for a sum of Rs. 1000/-; that defendant No. 1 did not execute any agreement to sell on 12-10-1974 in favour of defendant No. 2 and that defendant No. 2 was not a bona fide purchaser for value without notice. The Lower Appellate Court, therefore, concluded that the plaintiff was entitled to a decree of specific performance. The Civil Appeal was allowed and the judgment and decree of the Trial Court was set aside. It was further ordered that both the defendants shall execute the sale-deed in favour of the plaintiff within a period of one month failing which the plaintiff shall have a right to get the sale-deed executed through the process of the Court.
6. I have heard Sri Ranian Srivastava, learned counsel for the appellant but no one has appeared for the respondents, even though the list had been revised.
7. The substantial questions of law, that had been framed at the time of admission of the Second Appeal, are as follows:-
"(1) Whether the Suit was rightly decreed on the basis of the terms set up by the plaintiff?
(2) Whether on the facts and circumstances of the case, the judgment of the Lower Appellate Court is in accordance with la
