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YATINDRA SINGH AND VIJAY KUMAR VERMA, JJ.
Vijay Kumar Sharma
Versus
Devesh Behari Saxena.
F.A. No. 240 of 1998
Decided On : 16-11-2007
Mandatory Injunction - Specific Performance of Agreement - Registration Act 1908, Transfer of Property Act 1882 - The court held that the suit for mandatory injunction directing the defendant to get the agreement to sell dated 22-1-1993 registered and then its specific performance to get the sale deed executed and registered is not legally maintainable. The agreement dated 22-1-1993 being an unregistered document is inadmissible in evidence and it could not be taken into consideration for passing a decree for its specific performance in favor of the plaintiff. The court also set aside the decree for mandatory injunction directing the defendant to get the agreement registered and thereafter its specific performance.
Fact of the Case:
The plaintiff filed a suit for specific performance of an agreement for sale and possession over a disputed plot. The defendant contested the suit, arguing that the agreement was unregistered and unenforceable. The court decreed the suit for mandatory injunction directing the defendant to get the agreement registered and then execute the sale deed in favor of the plaintiff. The defendant appealed against this decree.
Finding of the Court:
The court found that the suit for mandatory injunction directing the defendant to get the agreement registered and then its specific performance could not be maintained as the agreement was unregistered and inadmissible in evidence. The court set aside the decree for mandatory injunction and specific performance.
Issues: The issues before the court were whether the suit for mandatory injunction for direction to get the agreement to sell dated 22-1-1993 registered is maintainable, whether the agreement to sell dated 22-1-1993 being unregistered document is not legally enforceable and decree for specific performance of contract cannot be passed, and whether a comprehensive suit to get the agreement to sell dated 22-1-1993 registered and then its specific performance to get the sale deed executed and registered is legally maintainable.
Ratio Decidendi: The court held that the suit for mandatory injunction directing the defendant to get the agreement to sell dated 22-1-1993 registered and then its specific performance to get the sale deed executed and registered is not legally maintainable as the agreement was unregistered and inadmissible in evidence.
Final Decision: The court partly allowed the appeal, setting aside the decree for mandatory injunction directing the defendant to get the agreement registered and thereafter its specific performance. The suit was decreed for the refund of earnest money with interest, and the parties were directed to bear their own costs throughout.
Based on the provided legal document, the main legal points are as follows:
An unregistered agreement for sale of immovable property is inadmissible as evidence and cannot serve as the basis for a decree for specific performance or for issuing a mandatory injunction to compel registration (!) (!) (!) .
The court held that a suit seeking a decree for registration of an unregistered agreement, without first availing the remedies provided under the Registration Act, such as filing a suit under the relevant provisions for registration, is not legally maintainable. The failure to follow the prescribed statutory procedure renders such a suit invalid (!) (!) .
The agreement in question was executed solely for obtaining permission from the Income Tax Department and was not intended as a final, legally enforceable contract for sale. Consequently, the agreement does not constitute a legally binding or enforceable contract for transfer of ownership (!) (!) .
The agreement to sell, being an unregistered document, is inadmissible in evidence for the purpose of specific performance under the applicable law, and thus, the court cannot decree specific performance based on it (!) (!) .
The court emphasized that the proper legal remedy for ensuring registration of a document is to follow the statutory procedures, and failure to do so cannot be circumvented by filing a suit for a mandatory injunction or specific performance without prior registration or adherence to statutory requirements (!) (!) .
The court also clarified that the agreement was not a lease agreement or a document exempt from registration, and no evidence suggested that the agreement was executed for purposes other than obtaining permission, which further undermines its enforceability (!) (!) .
As a result of these findings, the court set aside the decree for mandatory injunction and specific performance, and instead, decreed the suit for the refund of earnest money with interest. The interest was awarded at a reasonable rate, considering the circumstances, from the date of the agreement until recovery (!) (!) .
The parties were ordered to bear their own costs throughout, and the lower court record was to be returned expeditiously (!) (!) .
In summary, the key legal principles established are that unregistered agreements for sale of immovable property are inadmissible and cannot form the basis for specific performance or mandatory injunctions unless statutory procedures for registration are properly followed. The agreement in this case was deemed executed solely for obtaining permissions, not as a binding sale agreement, leading to the conclusion that the suit for specific performance was not maintainable.
VIJAY KUMAR VERMA, J. :- Challenge in this appeal is to the judgement and decree dated 18-04-1998, passed by 3rd Additional Civil Judge (Senior Division) Ghaziabad, in O.S. No. 436 of 1995 (Devesh Behari Saxena v. Vijay Kumar Sharma), whereby the suit has been decreed for mandatory injunction directing the defendant to get the agreement to sell dated 22-1-1993 registered before registering authority within one month and then to execute sale deed in favour of the plaintiff in terms of this agreement after receiving balance sale consideration of Rs. 13,21,000/- (Rupees Thirteen lac Twenty One Thousand only) and hand over possession of the disputed plot to the plaintiff after getting the sale deed registered.
It is further held in the impugned decree that if due to pendency of appeal in Honble Supreme Court or non-availability of no objection certificate from the competent authority, specific performance of the said agreement becomes impossible, then the plaintiff would be entitled to get back his earnest money of Rs. 7,00,000/- (Rupees seven lac) from defendant with interest @ 18% per annum from 22-1-1993 to 14-4-1995 and thereafter @ 6% per annum from 15-4-1995.
FACTS
2. The plaintiff-respondent instituted O. S. No. 436 of 1995 in the court of Civil Judge (Senior Division) Ghaziabad, for specific performance of the agreement for sale dated 22-1-1993 and possession over the disputed plot. It was also prayed that if due to any legal requirement, registration of the agreement is considered necessary, then the same be got registered first and, thereafter, transfer deed be got executed and registered in favour of the plaintiff. In the alternative, relief for decree of refund of earnest money of Rs. 7,00,000/- and recovery of Rs. 13,21,000/- as damages with interest @ 18% per annum was also claimed.
Shorn of unnecessary details, the case of the plaintiff, in brief, is that the defendant agreed to sell his plot No. 133 (Block A) area 465 Sq. Mtrs., situate in Sector 15-A, NOIDA, Paragana and Tehsil Dadri, District Ghaziabad for consideration of Rs. 20, 21,000/- and after receiving Rs. 7,00,000/ - in part payment through cheque No. 857877 of Canara Bank, Green Park Extension, New Delhi as earnest money, executed an agreement to sell on 22-01-1993. The balance sale consideration was agreed to be paid at the time of execution/registration of transfer deed, which was to be executed by 2-4-1993 after obtaining all necessary permissions from NOIDA and concerned departments. It is alleged that in terms of the said agreement both the parties submitted form No. 37-1 for getting permission from Income Tax Department under section 269 UC (2) (3) of Income Tax Act 1961 and defendant also submitted form No. 34A under section 230A of Income Tax Act, but permission was not granted by the Income Tax Department and order for purchase of the disputed properly by Central Government was passed on 24-3-1993. That order was challenged by the plaintiff in High Court in Writ Petition No. 619 of 1993, which was dismissed on 15-04-1993 on the ground that purqhaser has no right to get permission from Income Tax Department for purchasing the property. Thereafter, the defendant filed Writ Petition No. 669 of 1993, which was allowed on 20-09-1994 and order dated 24-3-1993 of Income Tax Department was quashed. It is further alleged that after decision of the aforesaid writ petition, the defendant neither informed the plaintiff about clearance certificate from Income Tax Department and no objection certificate etc., nor he executed transfer deed in favour of the plaintiff, due to which the plaintiff got a notice served on the defendant on 24-1-1995, but inspite of that notice, the defendant did not execute the transfer deed of the disputed property in favour of the plaintiff in terms of the agreement to sell dated 22-1-1993, whereas the plaintiff was always ready and willing to get the transfer deed executed after making payment of the balance sale considera
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