Earlier Buyer Can Seek Cancellation Of Later Sale; Subsequent Transactions Cannot Override Prior Rights: Delhi High Court
The Delhi High Court has held that a buyer under an earlier transaction is entitled to challenge and seek cancellation of a subsequent sale of the same property by the same seller, affirming that such later deals cannot override prior rights.
Justice Mini Pushkarna in her 86-page judgment observed,
“where two successive transfers of the same immovable property have been made, the one prior in time takes precedence in law over the transfer that is subsequent in time. The aforesaid provision encapsulates the maxim ―qui prior est tempore potior est jure‖, which means that he who is earlier and prior in time, is stronger in law and has a superior right in law.”
Reliance was placed on Smt. Subudini Kar and Another Versus Smt. Sabitri Rani Deb (2012) where the Gauhati High Court while dealing with Transfer of Property Act held that when similar rights are created in favour of two persons at different times, the one who has the advantage in time should also have the advantage in law.
The Court was dealing with an appeal over a dispute regarding a property in West Delhi, where the original owner had first executed a set of documents in 1988 in favour of the plaintiff, including an agreement to sell, power of attorney, wills and supporting documents.
Nearly two decades later, after the death of one of the co-owners, the same seller executed another set of documents in 2006 in favour of a third party purchaser.
The later purchaser (Appellant) challenged the trial court's decision which declared the subsequent Agreement to Sell of 2006 as null and void.
The High Court held,
“in the present case, both the parties do not have a registered Sale Deed in their favour and have relied upon other documents to claim right and interest over the suit property. Considering, the evidence and documents on record, it is manifestly evident that the respondent no. 1 has a superior right over the suit property.”
Appellant argued that the earlier buyer (Respondent no.1), not being a party to the 2006 transaction, could not have sought cancellation of that agreement.
The Court however cited Section 31 of the Specific Relief Act, which permits “any person” against whom a written instrument may cause injury to seek its cancellation.
It further emphasised that for a subsequent purchaser to be a bona fide purchaser, he must show that he did not have notice of the earlier contract, whether actual, constructive or imputed notice.
“...where a subsequent purchaser relies merely on the assertions of the vendor, and abstains from making further inquiry into the subsisting interests in the property, he cannot escape the consequences of deemed notice…since the appellant himself admits that he only relied on the oral assurances of respondent no. 2, and never himself verified the records from the concerned authorities, he cannot be said to have exercised due diligence before entering into the Agreement to Sell dated 18th August, 2006,” the Court said.
As such, the Court affirmed the decree in favour of the earlier buyer and dismissed the appeal.
Appearance: Mr. Ashim Vachher, Sr. Adv. with Ms. Saiba. M. Rajpal, Advocate for Appellant; Mr. Rajat Wadhwa, Mr. Gurpreet Singh, Ms. Anshika Juneja, Advocates for R-1
Case title: Rajeev Miglani v. Urmil Gujral & Anr.
Case no.: RFA 545/2016