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IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
Abhinand Kumar Shavili, Vakiti Ramakrishna Reddy, JJ
Dodda Gandhi Prasad – Appellant
Versus
Siripurapu Sudharshana Rao – Respondent
Appeal Suit No.128 of 2014

An agreement of sale does not create title or interest in immovable property. Specific performance cannot be granted against a party who lacks ownership title. However, courts may grant the alternative relief of refunding advance consideration if the payment is established by evidence.

Headnote:(A) Specific Relief Act, 1963 - Sections 16(c), 20, 21, 22 - Transfer of Property Act, 1882 - Section 54 - Suit for specific performance - Agreement of sale - Mere agreement to sell does not create interest in or charge on immovable property - Specific performance is a discretionary and equitable remedy - In absence of a registered conveyance deed, specific performance cannot be enforced against an agreement-holder who lacks valid title to the property. (Paras 19, 20, 21, 39, 40)

(B) Practice and Procedure - Readiness and Willingness - Continuous readiness and willingness from the date of the contract till the decree is a condition precedent for specific performance - Failure to plead or prove financial capacity to perform obligations is fatal to the suit. (Paras 25, 26, 27)

(C) Civil Procedure - Non-joinder of parties - In a suit for specific performance between an agreement holder and the original owner, intermediate agreement holders who lack privity of contract are not necessary parties. (Paras 30, 31)

(D) Civil Procedure - Alternative Relief - When specific performance is denied due to lack of title, the court may grant alternative relief of refund of advance consideration if payment is acknowledged in the agreement or proved by evidence. (Paras 35, 36, 37)

Facts of the case:
The appellant entered into an agreement of sale for agricultural land with the respondent. The respondent, who was not the owner but an agreement-holder, failed to execute a sale deed despite receiving advance payments. The trial court dismissed the suit for specific performance, citing that the respondent had no title and the suit was bad for non-joinder of parties, though it held the suit was within the limitation period.

Findings of Court:
The court held that while the execution of the agreement was proved, the respondent did not possess the title to the property. Consequently, specific performance is not enforceable. The plaintiff failed to demonstrate continuous readiness and willingness as required. However, the plaintiff successfully proved the payment of advance consideration, entitling them to a refund under Section 22 of the Act.

Issues: Whether the agreement of sale was enforceable against a party lacking ownership title; whether the plaintiff proved continuous readiness and willingness; whether the suit was bad for non-joinder of necessary parties; and whether the plaintiff was entitled to a refund of advance consideration.

Ratio Decidendi: An agreement of sale does not convey title or create an interest in property under Section 54 of the Transfer of Property Act; hence, it cannot be specifically enforced for a registered sale deed against a party that is not a legal owner. However, pursuant to Section 22 of the Specific Relief Act, a court may grant the alternative relief of refunding earnest money if the evidence proves such payments were made.

Result: Appeal partly allowed. Decree of dismissal for specific performance affirmed; decree granted for refund of advance consideration with interest.