SUPREME COURT OF INDIA
VIKRAM NATH, AHSANUDDIN AMANULLAH, JJ.
Kaushik Premkumar Mishra & Anr. - Appellants
Versus
Kanji Ravaria @ Kanji & Anr. - Respondents
Civil Appeal No. 1573 of 2023
Decided On : 19-07-2024

IMPORTANT POINTS
(1) A registered document carries with it presumption of correctness unless proved otherwise.
(2) Agreement to Sell – Doctrine of bona fide purchaser does not protect a subsequent purchaser if vendor had already transferred those rights through a prior sale deed.

Headnote:

(A) Specific Relief Act, 1963 – Section 31 – Agreement to Sell – Suit for Cancellation of Sale Deed – A registered document carries with it presumption of correctness unless proved otherwise – Defendant No. 1 having not entered witness box and not having led any evidence, Trial Court and High Court wrongly shifted burden on plaintiff to prove execution of sale deed and also payment of sale consideration – Even if no sale consideration was paid though there was a registered sale deed, it would be at instance of vendor to challenge sale deed on the ground of no sale consideration being paid – Sale deed in favour of appellants has to be treated as a valid document. (Paras 30, 31, 32, 33.6 and 33.9)

(B) Registration Act, 1908 – Section 17 – Non-registration of a document – Non-registration of a document duly presented for registration could be for many reasons – But once it is registered, there is a presumption of correctness attached to it – If purchaser has no means to pay stamp duty or exorbitant demand of stamp duty is made by registering authority which purchaser is unable to pay at that time but he remains satisfied with fact that vendor has fairly and duly executed sale deed presented it for registration and put him in possession of purchased property which he is peacefully enjoying, he is always at liberty to pay deficiency of stamp duty at any point of time – Document presented for registration will remain with Registering Authority till such time, deficiency is removed – However, this pendency of registration on account of deficiency cannot enure any benefit to vendor, who has already eliminated all his rights by executing sale deed after receiving sale consideration – He cannot become owner of transferred land merely because document of sale is pending for registration. (Paras 33.8 and 33.13)

(C) Transfer of Property Act, 1882 – Section 41 – Specific Relief Act, 1963 – Section 31 – Agreement to Sell – Suit for Cancellation of Sale Deed – Doctrine of bona fide purchaser for value applies in situations where seller appears to have some semblance of legitimate ownership rights – However, this principle does not protect a subsequent purchaser if vendor had already transferred those rights through a prior sale deed – In a case where vendor deceitfully executes a second sale deed 26 years after initial transfer, without disclosing earlier transaction and without any ongoing litigation regarding the property, subsequent purchaser cannot claim benefits of a bona fide purchaser – Essentially, if vendor’s rights were already severed by first sale, any later sale deed made without transparency and in bad faith is invalid – Subsequent purchaser, even if unaware of prior sale, cannot be considered bona fide because vendor no longer had legal right to sell the property – Protection afforded by bona fide purchaser doctrine is nullified by vendor’s deceitful conduct and pre-existing transfer of rights – Impugned Judgment of High Court set aside and that of first Appellate Court decreeing suit of appellant restored with exemplary costs of Rs.10,00,000/- to be paid to appellants. (Paras 35, 40 and 41)

Facts of the case:

Instant appeal by plaintiff assails correctness of judgment and order dated 9th June, 2022 passed by High Court of Judicature at Bombay, whereby Second Appeal filed by defendant no.2 (respondent no.1 herein) was allowed judgment of first Appellate Court was set aside and that of Trial Court dismissing suit of appellant was maintained.

Findings of Court:

This is not a case of agreement to sell in favour of appellants but is a case of sale deed transferring ownership rights and possession. It would be open to respondent no.1 to avail such remedy as may be available under law to recover sale consideration paid by him to respondent No.2. Sale deed in favour of respondent No.1 needs to be cancelled and registering authority be directed to score out the same from records as directed by first Appellate Court.

Result : Appeal allowed.