Suit For Specific Performance - Once Vendor Admits Execution Of Agreement & Payment Of Consideration, Nothing Further Is To Be Proved : Supreme Court

The Supreme Court, on Thursday, held that once the execution of agreement to sell and payment of advance substantial sale consideration is admitted by the vendor, there is nothing further required to be proved by the vendee in a suit for specific performance of agreement to sell. A Bench comprising Justices M.R. Shah and B.V. Nagarathna allowed an appeal assailing the order of the Karnataka High Court, which set aside the order of the Trial Court granting decree for specific performance of agreement to sell. Factual Background The appellant claimed that she had entered into an agreement with the respondent no. 1 to purchase the suit property for Rs. 29 lakhs. An advance of Rs. 20 lakhs was paid by her. Later, on demand Rs. 6 lakhs was paid and an endorsement in that regard was made by the respondent no. 1 on the agreement. The respondents did not execute the sale deed after repeated requests made by the appellant. Eventually, she found out that the respondent no. 2 in whose name respondent no. 1 had executed a power of attorney, executed two sale deeds in favour of their sisters-in-law (subsequent purchasers). A legal notice was served on the respondents urging execution of the sale deed, but the respondent no. 1 did not execute. In view of the same, on 12.04.2005, the appellant filed a suit for specific performance of agreement to sell. The respondent no. 1 conceded to the execution of the agreement to sell and the consideration paid, whereas respondent no. 2 assailed the same. The Trial Court decreed the suit as the original owner, respondent no. 1 had admitted the execution of the agreement to sell in favour of the appellant. An appeal was preferred by subsequent purchasers in whose favour respondent no. 2 had executed the sale deeds in exercise of the power of attorney. The Karnataka High Court quashed and set aside the order of the Trial Court. The High Court held that since there was no prayer to declare the subsequent sale as null and void, such a relief could not have been granted.Contentions raised by the parties Senior Advocate, Mr. S.N. Bhat appearing on behalf of the appellant defended the decree passed by the Trail Court by submitting that the original owner of the concerned property had admitted the execution of the agreement and payment of substantial amount thereunder. It was argued that the original power of attorney was handed over to the appellant at the time of execution of agreement to sell. He contended that the High Court erred in holding that it was necessary for the agreement holder to seek cancellation of sale deed executed in favour of the subsequent purchasers. Relying on a catena of judgments, including Lala Durga Prasad And Ors. v. Lala Deep Chand And Ors. 1954 SCR 360 and Rathnavathi And Anr. v. Kavitha Ganashamdas (2015) 5 SCC 223, Mr. Bhat submitted that it was sufficient to implead the subsequent purchase in suit for specific relief against the original owner and seek direction to such purchasers to join in the conveyance. The transaction between the third parties and the respondent no. 2 was also challenged as sham transactions. Therefore, it was argued that the High Court had erred in setting aside the decree passed by the Trial Court in terms of Section 20 of the Specific Relief Act. As no one appeared for the respondents, the Court proceeded with the appeal ex-parte. Analysis by the Supreme Court The Court opined that once the execution of agreement to sell and the payment of advance substantial sale consideration was admitted by the respondent no. 1, nothing further was required to be proved by the appellant in the suit instituted for specific performance. It was of the view that the High Court could not have upset the decree passed by the Trial Court on the ground that there was no specific relief of cancellation of the sale deed executed in favour of subsequent purchasers, especially when the Trial Court had framed specific issues pertaining to the said sale deeds. Moreover, it observed, the High Court had not appreciated the finding of the Trial Court that the sale consideration paid by the subsequent purchasers had not been established and proved and hence were nominal sale deeds. The Court noted that the stamp papers of agreement to sell in favour of the appellant were purchased in the name of the respondent no. 2 and therefore he was aware of the said agreement. The Court stated that the High Court had resorted to Section 20 of the Special Relief Act to exercise discretion in denying relief, but the same would not hold ground as - The Trial Court found that the original owner had admitted the execution of agreement to sell in favour of the appellant, by accepting a substantial advance consideration;The respondent no. 2 was aware of such agreement;The respondent no. 2 executed nominal sale deeds in favour of purchasers who were their sisters-in-law. Case Name: P. ...

Suit For Specific Performance - Once Vendor Admits Execution Of Agreement & Payment Of Consideration, Nothing Further Is To Be Proved : Supreme Court

Sohini Chowdhury

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