A co-owner of unpartitioned property can transfer their undivided interest, but cannot convey a specific, physically defined portion of the property. Consequently, a request for specific performance of a defined portion must be denied, though the buyer remains entitled to a refund of payments made.

Headnote:(A) Transfer of Property Act, 1882 - Section 44 - Specific Performance - Jointly owned property - A co-owner of an unpartitioned property is legally competent to transfer their undivided interest in the property, as the transferee acquires the right to joint possession or common enjoyment and to enforce partition - However, a co-owner cannot transfer a defined, specific portion of the property, such as a ground floor or roof, in the absence of a physical partition by metes and bounds. (Paras 70, 71, 79, 81)

(B) Indian Contract Act, 1872 - Section 73 - Agreement to Sell - Earnest money vs. Advance money - The character of a payment as earnest money or advance money is determined by the intent of the parties and the surrounding conditions - If a contract fails due to the inability of the seller to transfer a specific portion of unpartitioned property as agreed, the buyer is entitled to a refund of the amount paid, as such payments are typically treated as advance rather than earnest money liable for forfeiture. (Paras 61, 62, 63, 64, 83)

Facts of the case:
An appeal was filed against a trial court judgment that declined a decree for specific performance of an agreement to sell. The agreement pertained to a defined portion of a property held by a co-owner who possessed only an undivided share. The trial court found the agreement valid as to the execution, but denied specific performance because the subject matter (a specific ground floor portion) could not be sold as it had not been partitioned. The court directed the refund of the earnest money paid by the purchaser, citing the seller's inability to perform the contract in its specific terms.

Findings of Court:
The court observed that while an agreement to sell an undivided share in joint property is enforceable to the extent of that share, it cannot be specifically performed in relation to a physically defined portion unless the property is partitioned. Consequently, the claim for specific performance was rightly rejected, and the order for the refund of the consideration paid was upheld.

Issues: The main issues were whether a co-owner can enter into a valid agreement to sell a defined portion of an unpartitioned property and whether the purchaser is entitled to a refund of money paid when specific performance is rendered impossible due to the nature of the co-ownership.

Ratio Decidendi: The court held that an agreement to sell, while valid for an undivided share, does not grant the right to sell or possess a specific portion of unpartitioned joint property. Therefore, where the specific performance of a clearly defined portion is sought but cannot be granted, the court may decline the relief but order the restitution of payments made under the contract.

Result: Appeal dismissed.

Table of Content
1. contract inception and breach allegations concerning property sale. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7 , 8)
2. challenges to the validity of the property agreement based on fraud, misrepresentation, and lack of partition. (Para 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19 , 20)
3. trial court finding on invalidity of specific performance due to co-ownership but requirement to refund earnest money. (Para 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28)
4. appellate contentions regarding the burden of proof for payment receipt and financial capacity. (Para 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36)
5. evidentiary standards for proving contractual fraud and execution of agreement. (Para 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46)
6. admissibility of oral evidence and adverse inference from failure of the defendant to testify. (Para 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56 , 57 , 58)
7. legal distinction between advance money and earnest money in contractual obligations. (Para 59 , 60 , 61 , 62 , 63 , 64 , 65 , 66)
8. section 44 tpa rights: co-owners can sell undivided shares, but not specific defined portions without partition. (Para 67 , 68 , 69 , 70 , 71 , 72 , 73 , 74 , 75 , 76 , 77 , 78 , 79 , 80 , 81 , 82 , 83)
9. final adjudication confirming non-performance of specific contract justifies refund of consideration. (Para 84 , 85 , 86 , 87)

JUDGMENT :

NEENA BANSAL KRISHNA, J.

1. Regular First Appeal under Section 96 read with Order 41 Rule 1 Code of Civil Procedure, 1908 (Hereinafter referred to as ‘CPC’) has been filed by the Appellants / Defendants to challenge the Judgment and Decree dated 25.01.2025 whereby, in the Suit of the Plaintiff for Specific Performance, the Appellant / Defendant No.1 (since deceased) has been directed to return the earnest money of Rs.10 Lakhs paid under the Agreement to Sell.

2. The Plaintiff / Respondent No.1 had instituted a Civil Suit CS DJ NO.615841/2016 for Specific Performance and Permanent Injunction.

3. The facts in brief, are that the Defendant / Appellant Sayed Naim Shafi (since deceased), now represented by the Legal Heirs, was the owner of 1/3rd undivided share in the property bearing No. 898, Chhatta Sheikh Mangloo, Nawab House, Part-II, Jama Masjid, Delhi-110006 (Hereinafter referred to as ‘Suit Property’). He entered into an Agreement to Sell dated 18.06.2013 (hereinafter referred to as ‘ATS’) with the Plaintiff / Respondent No.1 Ata Ur Rehman, in respect of the Ground Floor admeasuring 230 sq. yards and Roof over it forming part of the Suit Property for a sale consideration of Rs.80 Lakhs. A sum of Rs.10 Lakhs as earnest money, was paid to the Defendants in cash at the time of signing of Agreement to Sell.

4. The Defendant No. 2 Hijab Naeem Shafi, wife of Defendant No.1 Sayed Naeem Shafi, had an active hand in finalizing the deal and had received the earnest money. The Agreement to Sell was executed in the presence of witnesses Sayed Shuja Shafi and Mohd. Irfan, and was signed, and thumb impressions of both the Defendants, was put.

5. The Defendant No.1 agreed to execute the Sale Deed in respect of the portion as mentioned in the Agreement to Sell after receiving the balance sale consideration of Rs.70 Lakhs, on or before 17.12.2013. It was further agreed that at the time of execution of Sale Deed, the actual vacant possession of the specified portion of the Suit Property, shall be handed over to the Plaintiff. In case the Defendants refused to deliver the possession of the Suit Property or refused to sign the Sale Deed in favour of the Plaintiff, the Defendants were liable to return double the amount of earnest money. The Defendants assured the Plaintiff that the Suit Property was free from all kinds of encumbrances and the Defendant shall be liable for any loss or damages, if suffered or sustained by the Plaintiff.

6. The Plaintiff, on or about 15.11.2013, approached the Defendants to accept the balance sale consideration and to execute the Sale Deed. However, they failed t

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2026 Supreme(Del) 941

A co-owner of unpartitioned property can transfer their undivided interest, but cannot convey a specific, physically defined portion of the property. Consequently, a request for specific performance of a defined portion must be denied, though the buyer remains entitled to a refund of payments made.

Cases Referred (5)