Summary
A specific-performance decree was upheld in principle against subsequent purchasers with constructive notice, but restricted to the willing first plaintiff’s undivided half share. Cancellation of the subsequent sale deeds was unnecessary. Because agricultural-land transfer required government permission, conveyance was made conditional on permission, with a refund alternative upon final refusal and partition left to separate proceedings.
Issues
- Whether oral evidence could establish that the registered agreement was sham and whether that defence was proved.
- Whether subsequent purchasers had constructive notice and their sale deeds required cancellation.
- Whether statutory permission for agricultural-land transfer prevented a conditional decree.
- How the second plaintiff’s refusal to seek performance affected the relief.
Provisions considered
- Sections 91 and 92, Indian Evidence Act, 1872These provisions regulate proof of written terms and attempts to vary them, but do not exclude evidence that the parties never intended the document to operate as a contract. The sham-transaction defence nonetheless failed on the pleadings and evidence. (¶¶ 11, 12)
- Section 3, Explanation I, Transfer of Property Act, 1882Registration of the compulsorily registrable agreement gave constructive notice to subsequent purchasers, who had not searched the registration records and were not purchasers in good faith without notice. (¶ 13)
- Section 19(b), Specific Relief Act, 1963Specific performance could bind subsequent purchasers who failed to establish the protected status of transferees for value in good faith without notice; they could be directed to join the conveyance without cancellation of their sale deeds. (¶¶ 14, 15, 16)
- Section 54, Transfer of Property Act, 1882An agreement for sale itself creates no interest or transfer in the property; the agricultural-land restriction attached to execution of the conveyance rather than the agreement. (¶ 17)
- Section 154-B(1) and (2)(h), Uttaranchal (Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950) adaptation and amendment lawThe restriction on sale to a non-agriculturist did not foreclose a decree requiring an application for statutory permission and making conveyance conditional on its grant. (¶¶ 17, 18, 21)
Held
- Sections 91 and 92 do not prevent proof that a document was never intended to embody an operative contract. However, the factual explanation advanced in testimony went materially beyond the written statements and conflicted with the pleaded forgery case; the agreement was not established to be sham or bogus. (¶¶ 11, 12)
- Because the agreement was compulsorily registrable under the applicable State amendment and was registered, the later purchasers had constructive notice. They had not searched the Sub-Registrar’s records and could not claim the protection of purchasers for value in good faith without notice. (¶ 13)
- A decree may require the vendor to perform the contract and subsequent purchasers to join the conveyance to pass their title. A separate prayer cancelling the subsequent sale deeds is unnecessary where Section 19(b) applies. The contrary proposition in B. Vijaya Bharathi did not bind the Court because it overlooked the larger-bench ruling in Lala Durga Prasad. (¶¶ 14, 15, 16)
- An agreement for sale does not itself transfer agricultural land. The statutory restriction therefore does not invalidate the agreement merely because conveyance requires permission. The vendor has an implied obligation to take steps necessary for transfer, including seeking permission; specific performance may be contingent on permission being granted. (¶¶ 17, 18)
- There was no reason to disturb the concurrent finding that the first plaintiff was ready and willing. But the second plaintiff did not seek performance and supported the defendants. The decree was consequently confined to the first plaintiff’s one-half undivided share and the second plaintiff’s suit dismissed. (¶¶ 19, 20, 21)
- The defendants must join the first plaintiff in applying for permission within two months and take all necessary steps. On their default the executing court must appoint a commissioner to act for them. If permission is granted, all defendants must execute the sale deed for the half share within three months of its grant. (¶ 21)
- If permission is finally refused, the first plaintiff is entitled to refund of Rs.7,000 with 8% annual interest from institution of the suit until realisation against the vendor’s legal representative, limited to the inherited estate. Rejection of permission may be challenged according to law. Possession cannot be obtained in execution of this decree; a general partition suit remains available. (¶ 21)
Result
Appeal partly allowed without costs. Conditional specific performance restricted to the first plaintiff’s undivided half share; second plaintiff’s suit dismissed. Permission, commissioner, refund and separate-partition directions govern execution.