Supreme Court Upholds Assignability of Repurchase Rights in Conditional Sale Deed: Indira Devi vs. Veena Gupta (2023)

Date of the Judgment: July 4, 2023
Citation: Civil Appeal No. 9833 of 2014
Judges: Abhay S. Oka, J., Rajesh Bindal, J.

Can a person transfer their right to repurchase a property under a conditional sale deed to someone else? The Supreme Court of India recently addressed this question in a case concerning a property dispute in Patna. The core issue revolved around whether the right to repurchase a property, as stipulated in a conditional sale deed, is a personal right that cannot be transferred or if it can be assigned to another individual. The Supreme Court, in this judgment, clarified the legal position on the assignability of such rights, impacting how conditional sale deeds are interpreted and enforced. The judgment was delivered by a two-judge bench comprising Justice Abhay S. Oka and Justice Rajesh Bindal, with the opinion authored by Justice Rajesh Bindal.

Case Background

The case originated from a property dispute involving a conditional sale deed executed in 1977. Kaleshwar Prasad Singh, a tenant, and his son sold a property to Indira Devi for ₹5000. The sale deed included a condition: if the vendors returned the money by July 1984, Indira Devi would return the property. If they failed to do so, Indira Devi would become the full owner. In 1983, Kishori Lal Sahu, the original owner and father of Kaleshwar Prasad Singh, gifted the same property to his daughter-in-law, Veena Gupta, through a registered gift deed. The gift deed mentioned that Veena Gupta could repurchase the property from Indira Devi. When the vendors tried to return the money, Indira Devi refused, leading to a civil suit filed by Veena Gupta and Kishori Lal Sahu in 1983.

Timeline:

Course of Proceedings

The Trial Court dismissed the suit, a decision upheld by the lower appellate court. However, the High Court of Judicature at Patna reversed these decisions in a second appeal. The High Court framed three substantial questions of law, focusing on whether the lower courts erred in dismissing the suit, not considering the main issues, and not addressing the merger of tenancy with ownership. The High Court concluded that the lower courts had erred and decreed the suit in favor of the respondents. The appellant, Indira Devi, then appealed to the Supreme Court.

Legal Framework

The Supreme Court considered the following legal principles and provisions:

• Section 15(b) of the Specific Relief Act, 1963: This provision allows the assignee of a contract to seek specific performance, unless the contract is personal in nature.

The Court also referred to previous judgments to determine whether the right to repurchase is personal or assignable.

Arguments

Arguments of the Appellant (Indira Devi):

• The right to repurchase the property was personal to Kishori Lal Sahu and could not be assigned to Veena Gupta.
• The gift deed was not a valid gift as there was a consideration involved (the payment of ₹5000).
• The plaintiffs were not always ready and willing to fulfill the condition of the conditional sale deed, as they did not have the money.
• The Gift Deed executed in favor of Veena Gupta was not valid as Kishori Lal Sahu was not in good health.
• Multiple reliefs claimed in the suit made it not maintainable.

The appellant relied on the judgments of the Supreme Court in Bhoju Mandal and Ors. vs. Debnath Bhagat and Ors. [1963 Supp (2) SCR 82] and Kapilaben and Ors. vs. Ashok Kumar Jayantilal Sheth, through POA Gopal Bhai Madhusudan Patel and Ors. [(2020) 20 SCC 648] to argue that the right to repurchase was personal and could not be assigned.

Arguments of the Respondents (Veena Gupta & Ors.):

• The primary relief sought was specific performance of the contract with possession.
• Kishori Lal Sahu had gifted the property to Veena Gupta, including the right to repurchase it.
• The gift deed explicitly stated that Veena Gupta could repurchase the property from Indira Devi.
• The respondents had offered the money to Indira Devi, and when she refused, they deposited it in court.
• The right to repurchase was not personal and could be assigned.

The respondents relied on the judgments of the Supreme Court in T.M. Balakrishna Mudaliar vs. M. Satyanarayana Rao and Ors. [(1993) 2 SCC 740] and Shyam Singh vs. Daryao Singh (dead) by LRs and Ors. [(2003) 12 SCC 160] to argue that the right to repurchase was not personal and could be assigned.

Issues Framed by the Supreme Court

The primary issue framed by the Supreme Court was:

1. Whether the vendor can assign the right contained in a sale deed to get the property registered back, or if the right being personal cannot be assigned.

Treatment of the Issue by the Court

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

Authorities

The Supreme Court considered the following authorities:

Judgment

How each authority was viewed by the Court?

• Sakalaguna Nayudu v. Chinna Munuswami Naykar [AIR 1928 PC 174]*: Followed. The Court affirmed that the benefit of a repurchase contract is assignable unless explicitly personal.
• T.M. Balakrishna Mudaliar vs. M. Satyanarayana Rao and Ors. [(1993) 2 SCC 740]*: Followed. The Court reiterated that an option to repurchase is generally assignable.
• Shyam Singh vs. Daryao Singh (dead) by LRs and Ors. [(2003) 12 SCC 160]*: Followed. The Court reinforced that a right to repurchase is assignable unless explicitly prohibited.
• Habiba Khatoon v. Ubaidul Huq [(1997) 7 SCC 452]*: Followed. The Court used this case to support the principle that the right to repurchase is assignable unless specified otherwise.
• Bhoju Mandal and Ors. vs. Debnath Bhagat and Ors. [1963 Supp (2) SCR 82]*: Distinguished. The Court clarified that this case was about the nature of the document (mortgage vs. sale) and not about assignability.
• Kapilaben and Ors. vs. Ashok Kumar Jayantilal Sheth, through POA Gopal Bhai Madhusudan Patel and Ors. [(2020) 20 SCC 648]*: Distinguished. The Court clarified that this case dealt with the assignment of obligations, not rights.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that a right to repurchase is generally assignable unless the terms of the document explicitly state otherwise. The Court emphasized that the conditional sale deed in this case did not contain any clause that restricted the assignment of the right to repurchase. Additionally, the Court noted that the assignment was within the family, as Kishori Lal Sahu transferred the right to his daughter-in-law, Veena Gupta. The Court also considered that the respondents had demonstrated their readiness and willingness to fulfill the condition by offering the money and depositing it in court when Indira Devi refused to accept it.

Fact:Law Ratio

The Court’s reasoning was more heavily influenced by legal principles and precedents (70%) than by the specific facts of the case (30%).

Logical Reasoning

The Court’s reasoning was based on the following points:

• The Court observed that the conditional sale deed did not contain any clause that restricted the assignment of the right to repurchase.
• The Court relied on previous judgments, particularly T.M. Balakrishna Mudaliar vs. M. Satyanarayana Rao and Ors. [(1993) 2 SCC 740] and Shyam Singh vs. Daryao Singh (dead) by LRs and Ors. [(2003) 12 SCC 160], which established that a right to repurchase is generally assignable unless explicitly stated otherwise.
• The Court noted that the assignment was within the family, as Kishori Lal Sahu transferred the right to his daughter-in-law, Veena Gupta.
• The Court considered that the respondents had demonstrated their readiness and willingness to fulfill the condition by offering the money and depositing it in court when Indira Devi refused to accept it.

The Court rejected the argument that the right to repurchase was personal to Kishori Lal Sahu, stating that “the condition of right to re purchase in sale deed will not be personal to the vendor unless the terms in the documents specifically state so.” The Court also rejected the argument that the gift deed was invalid because consideration was involved, stating that “That right could always be assigned by him with whatever conditions attached to it.” The Court further stated that, “The benefit of contract is assignable in cases where it does not make any difference to the person on whom the obligations lies, to which of two persons he is to discharge.”

The Court did not find any error in the judgment of the High Court and dismissed the appeal.

Key Takeaways

• The right to repurchase a property under a conditional sale deed is generally assignable unless the document explicitly states otherwise.
• A clause stating that the right to repurchase is personal to the vendor is necessary to restrict its assignment.
• The assignment of such a right within a family is valid and enforceable.
• Readiness and willingness to fulfill the condition of a conditional sale deed is crucial for seeking specific performance.

Directions

No specific directions were given by the Supreme Court.

Development of Law

The Supreme Court reaffirmed the established legal position that the right to repurchase under a conditional sale deed is assignable unless the document explicitly states otherwise. This judgment reinforces the principles laid down in previous cases like T.M. Balakrishna Mudaliar vs. M. Satyanarayana Rao and Ors. [(1993) 2 SCC 740] and Shyam Singh vs. Daryao Singh (dead) by LRs and Ors. [(2003) 12 SCC 160], providing clarity on the assignability of such rights. The ratio decidendi of the case is that the right to repurchase is not personal to the vendor unless explicitly stated in the document.

Conclusion

The Supreme Court dismissed the appeal, upholding the High Court’s decision that the right to repurchase in a conditional sale deed can be assigned. The Court emphasized that unless the document explicitly states that the right is personal to the vendor, it is generally assignable. This judgment provides clarity on the legal position regarding the assignability of repurchase rights and reinforces the importance of clear and explicit language in legal documents.