Supreme Court Overturns High Court Decision in Property Dispute: Rajeev Gupta & Ors. vs. Prashant Garg & Ors. (23 April 2025)

Date of the Judgment: 23 April 2025

Citation: 2025 INSC 552

Judges: Dipankar Datta, J., Prashant Kumar Mishra, J.

Can a family settlement be challenged by a third party? The Supreme Court of India addressed this question in a recent case involving a dispute over property rights. The core issue revolved around the validity of sale deeds and the applicability of limitation periods in a suit for cancellation, recovery of possession, and injunction. The bench, comprising Justice Dipankar Datta and Justice Prashant Kumar Mishra, overturned the Allahabad High Court’s decision, favoring the appellants and restoring the trial court’s original dismissal of the suit.

Case Background:

The case originates from a property dispute involving the family of Dr. Babu Ram Garg, the common ancestor of the parties. The dispute centers around House No. 49/1, Nai Mandi, Muzaffarnagar. Here’s a chronological breakdown of the key events:

• 17 October 1951: Dr. Babu Ram Garg allegedly executes a will, bequeathing the suit property to his two sons, Ishwar Chand and Dr. Karam Chand. His third son, Ramesh Chand, receives the business of a pharmacy and Rs 5,000 instead of a share in the property.
• 1956: A family settlement is purportedly entered into, resulting in the names of Leelawati (Ishwar Chand’s wife) and Ramesh Chand being recorded in respect of the suit property. The remaining properties are allotted to Dr. Karam Chand.
• 1984: Ishwar Chand passes away.
• 30 May 1987: Leelawati files a civil suit against Ramesh Chand, seeking ownership of the western portion of the suit property. The suit is decreed via compromise.
• 15 June 1992: Dr. Karam Chand institutes a suit against Ramesh Chand and Ishwar Chand’s heirs, seeking a permanent injunction to restrain them from alienating the suit property. An ex-parte ad-interim injunction is granted.
• 16 June 1992 & 29 June 1992: During the pendency of the second suit, Ramesh Chand executes two sale deeds in favor of the appellants, Rajeev Gupta & Ors., for a total consideration of Rs 80,000. The deeds are registered on 17 June 1992 and 30 June 1992, respectively.
• 28 September 1992: A compromise is reached between Dr. Karam Chand and Ishwar Chand’s heirs, with Dr. Karam Chand relinquishing his rights in the western portion of the house.
• 13 October 1992: The second suit is compromised between Dr. Karam Chand and Ramesh Chand, with Dr. Karam Chand’s absolute rights over the eastern portion of the suit property being accepted. Ramesh Chand is permitted to remain in possession and use part of the rental receipts.
• 1997: A mutation occurs in the revenue records in favor of the appellants.
• 2002: Ramesh Chand passes away.
• 25 February 2003: Dr. Karam Chand and his son institute a suit against the appellants and other heirs, seeking cancellation of the sale deeds, recovery of possession, and injunction.
• 28 January 2008: A compromise is reached between the plaintiffs and Ramesh Chand’s legal heirs, accepting the will and stating that Ramesh Chand had no right to execute the sale deeds.

Timeline:

Legal Framework:

The judgment refers to several important legal provisions that form the basis of its analysis:

• Section 100, Code of Civil Procedure, 1908 (CPC): Deals with second appeals to the High Court.
• Order 6 Rule 17, CPC: Concerns the amendment of pleadings in a civil suit.
• Section 68, Indian Evidence Act, 1872: Requires that at least one attesting witness be called to prove the execution of a will.
• Section 90A, Indian Evidence Act, 1872 (as amended by the State of Uttar Pradesh): Pertains to the presumption of valid execution of documents older than 30 years.
• Section 41, Transfer of Property Act, 1882 (ToP Act): Protects the rights of a transferee who acts in good faith, relying on the apparent ownership of the transferor.
• Section 52, Transfer of Property Act, 1882 (ToP Act): Deals with the doctrine of lis pendens, which states that a transfer of property during the pendency of a suit is subject to the outcome of that suit.
• Article 59, Limitation Act, 1963: Prescribes a three-year limitation period for suits seeking cancellation of documents.
• Article 65, Limitation Act, 1963: Prescribes a twelve-year limitation period for suits seeking possession of immovable property based on title.

These legal provisions are crucial in determining the rights and obligations of the parties involved in the property dispute.

Arguments:

The appellants (Rajeev Gupta & Ors.) and the respondents (Prashant Garg & Ors.) presented several arguments to support their respective positions.

Arguments by the Appellants:

• Validity of the Will: The appellants argued that the plaintiffs’ claim to title rested entirely on the will, which lacked pertinent particulars regarding its execution. They contended that the original will was not produced, and only a certified copy was presented five years after the suit was instituted.
• Nature of the Suit: The appellants asserted that the plaint originally contained a prayer for cancellation of the sale deeds, which was later given up. They argued that a suit for bare relief of possession could not succeed where there was a cloud over the title.
• Collusive Suits: The appellants contended that the first and second suits, which were decreed by way of compromise, were collusive and thus constituted an exception to the doctrine of lis pendens.
• Locus Standi: The appellants argued that Ramesh Chand had already executed the two sale deeds before the compromise in the second suit was recorded. Therefore, he no longer had any locus to enter into the said compromise.
• Interim Order: The appellants claimed that the interim order of injunction in the second suit was never communicated to them.
• Section 41 of the ToP Act: The appellants argued that Section 41 of the ToP Act applied to the proceedings since the plaintiffs had allowed Ramesh Chand to act as the owner of the property.
• Limitation: The appellants contended that the plaintiffs’ suit was barred by limitation, as the limitation period for suits seeking cancellation of documents is three years.

Arguments by the Respondents:

• Validity of the Will: The respondents argued that the will of Dr. Babu Ram Garg gave all three sons shares of the testator’s properties, leaving none behind. They contended that Ramesh Chand not having been bequeathed any interest in the suit property by his father, he could not have transferred any portion thereof to the appellants.
• Admission of the Will: The respondents asserted that the will stood admitted by all heirs of Dr. Babu Ram Garg, and none of the legal heirs contested the same.
• Violation of Stay Order: The respondents argued that the sale deeds executed by Ramesh Chand in favor of the appellants were executed in violation of the ad-interim stay order passed in the second suit and hence, were void.
• Prayer for Cancellation: The respondents contended that the plaint duly prayed for cancellation of sale deeds, by way of abundant caution.
• Section 41 of the ToP Act: The respondents argued that the appellants would not get the benefit of Section 41 of the ToP Act in the absence of any pleadings to such effect.
• Compromise Decrees: The respondents submitted that no challenge could have been laid to such compromise without filing an application under Order XXIII Rule 3, CPC.
• Limitation: The respondents submitted that the main relief sought in the suit was recovery of possession, the limitation period for which is twelve years.

Submissions Table:

Issues Framed by the Supreme Court:

The Supreme Court addressed the following key issues:

1. Whether the suit was barred by limitation.
2. Whether the sale deeds were void documents.
3. Whether the will stood admitted in the previous suits and was no longer required to be proved.
4. Whether the first appellate court was right in decreeing the suit without the plaintiffs seeking relief of declaration/cancellation.

Treatment of the Issue by the Court:

The following table demonstrates as to how the Court decided the issues:

Authorities:

The court considered the following authorities and legal provisions:

• Khatri Hotels (P) Ltd. v. Union of India, (2011) 9 SCC 126: Examined the position under Article 120 of the Limitation Act, 1908 vis-à-vis Article 58 of the Limitation Act.
• Rukhmabai v. Lala Laxminarayan, AIR 1960 SC 335: Stated that the right to sue accrues when the defendant has clearly and unequivocally threatened to infringe the right asserted by the plaintiff in the suit.
• Shakti Bhog Food Industries Ltd. v. Central Bank of India, (2020) 17 SCC 260: Applied Khatri Hotels (P) Ltd. in the context of Order VII Rule 11, CPC.
• Union of India v. West Coast Paper Mills Ltd., (2004) 2 SCC 247: Noticed the distinction between Article 58 and Article 113 of the Limitation Act.
• Madhukar Vishwanath v. Madhao, (1999) 9 SCC 446: Held that possession only being a consequential relief, Article 65 would not apply.
• L.C. Hanumanthappa v. H.B. Shivakumar, (2016) 1 SCC 332: Affirmed the principle in Madhukar Vishwanath v. Madhao.
• Rajpal Singh v. Saroj, (2022) 15 SCC 260: Held that where a composite suit had been filed for cancellation of the sale deed and of possession, the limitation period would have to be adjudged from the primary relief of cancellation.
• Sopanrao v. Syed Mehmood, (2019) 7 SCC 76: While adjudicating a suit for possession and declaration of title, held that the limitation for filing a suit for possession on the basis of title is 12 years.
• G.T. Girish v. Y. Subba Raju, (2022) 12 SCC 321: Held that a transfer which is made lis pendens is not a void document.
• Ramesh Verma v. Lajesh Saxena, (2017) 1 SCC 257: Held that the requirement of proof of a will in accordance with Section 68 is not done away with, even if the will is not disputed by the opposite party.
• Benga Behera v. Braja Kishore Nanda, (2007) 9 SCC 728: Observed that a document upon which a title is based is required to be proved by primary evidence, and secondary evidence may be given under Section 65(c) of the Evidence Act.
• Jagmail Singh v. Karamjit Singh, (2020) 5 SCC 178: Reiterated that under the Evidence Act, facts have to be established by primary evidence and secondary evidence is only an exception to the rule.
• Anathula Sudhakar v. P. Buchi Reddy, (2008) 4 SCC 594: Held that where the plaintiff is in possession, but his title to the property is in dispute, or under a cloud, or where the defendant asserts title thereto and there is also a threat of dispossession from the defendant, the plaintiff will have to sue for declaration of title and the consequential relief of injunction.

Authorities Considered by the Court:

Judgment:

What weighed in the mind of the Court?:

The Supreme Court’s decision in Rajeev Gupta & Ors. vs. Prashant Garg & Ors. was influenced by several key factors, primarily revolving around the principles of limitation, evidence, and property law. The Court emphasized the importance of adhering to the prescribed limitation periods for seeking legal remedies, particularly in cases involving the cancellation of sale deeds. The failure of the plaintiffs to initiate the suit within the stipulated three-year period weighed heavily against their claim.

The Court also focused on the plaintiffs’ inability to adequately prove the execution and validity of the will, which formed the basis of their title claim. The lack of primary evidence and the absence of attesting witnesses further weakened their case. Additionally, the Court considered the conduct of the parties and the circumstances surrounding the execution of the sale deeds, finding that the appellants were bona fide purchasers who had acted in good faith.

The ratio of fact to law in the Supreme Court’s decision can be analyzed as follows:

The Court’s decision was thus primarily based on legal principles, but the factual matrix of the case played a significant role in shaping the outcome.

Flowchart of the Decision-Making Process:

Conclusion:

The Supreme Court’s decision in Rajeev Gupta & Ors. vs. Prashant Garg & Ors. underscores the critical importance of adhering to limitation periods and providing adequate evidence to support claims in property disputes. The Court’s emphasis on the principles of limitation, the burden of proof, and the protection of bona fide purchasers serves as a reminder of the legal safeguards in place to ensure fairness and certainty in property transactions. The judgment highlights the necessity for plaintiffs to diligently pursue their legal remedies within the prescribed timeframes and to present compelling evidence to substantiate their claims.