Supreme Court Upholds Partition Rights, Rejects Disputed Sale Agreement: Venigalla Koteswaramma vs. Malempati Suryamba (2021)

Date of the Judgment: 19 January 2021

Citation: (2021) INSC 29

Judges: Sanjay Kishan Kaul, J., Dinesh Maheshwari, J., Hrishikesh Roy, J.

Can a disputed sale agreement prevent a rightful heir from claiming their share of inherited property? The Supreme Court of India recently addressed this critical question in a case concerning a family dispute over property partition. The core issue revolved around whether a sale agreement, challenged as fabricated, could override the rights of legal heirs to their share of the property. The judgment was delivered by a three-judge bench consisting of Justice Sanjay Kishan Kaul, Justice Dinesh Maheshwari, and Justice Hrishikesh Roy, with Justice Dinesh Maheshwari writing the opinion.

Case Background

The case involves Venigalla Koteswaramma (the plaintiff-appellant) and her siblings, who are the children of Malempati Kondiah from his first wife, Annapurnamma. After Annapurnamma’s death, Kondiah married another woman, also named Annapurnamma (the step-mother of the plaintiff and her siblings). The plaintiff filed a suit seeking partition of the properties left by her step-mother, Annapurnamma, who died issueless on 17.06.1978. The plaintiff claimed that she and her siblings were entitled to equal shares of the property. The suit was filed on 21.07.1978.

The contesting defendants, led by the step-mother’s brother, claimed that Annapurnamma had sold a portion of the property (Item No. 1 of the plaint A Schedule) to Malempati Satyanarayanavara Prasad under an agreement for sale dated 05.11.1976. They also claimed that she had executed a Will dated 15.06.1978 in favor of her mother and an attendant. The plaintiff disputed both the agreement for sale and the Will, alleging they were fabricated.

Timeline

Course of Proceedings

The Trial Court initially ruled in favor of the plaintiff, declaring both the agreement for sale and the Will as false and fabricated. However, the High Court, while upholding the Trial Court’s decision on the Will, reversed the finding regarding the sale agreement. The High Court held that the agreement was valid and binding on the plaintiff and her siblings. The High Court ordered that the property subject to the sale agreement would not be available for partition. During the pendency of appeals in the High Court, one of the siblings (defendant 2) died, and no steps were taken to substitute his legal representatives.

Legal Framework

The key legal provision in this case is Section 54 of the Transfer of Property Act, 1882, which defines a “sale” and clarifies that a contract for the sale of immovable property does not, by itself, create any interest in or charge on such property. The Act states:

“54. “Sale” defined. – “Sale” is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.
Sale how made. – Such transfer, in the case of tangible immoveable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument.
In the case of tangible immoveable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property.
Delivery of tangible immoveable property takes place when the seller places the buyer, or such person as he directs, in possession of the property.
Contract for sale. – A contract for the sale of immoveable property is a contract that a sale of such property shall take place on terms settled between the parties.
It does not, of itself, create any interest in or charge on such property.”

This provision underscores that an agreement for sale does not confer any ownership rights to the buyer until a formal sale deed is executed and registered.

Arguments

Plaintiff’s Arguments:

• The plaintiff argued that the High Court erred in reversing the Trial Court’s findings, which had correctly identified the sale agreement as fabricated.
• The plaintiff highlighted that the High Court overlooked the lack of explanation for why the alleged purchaser did not register the sale deed if a major portion of the consideration had been paid.
• The plaintiff emphasized that the beneficiaries of both the disputed sale agreement and the rejected Will were close relatives of defendant 4, raising questions about the genuineness of these documents.
• The plaintiff contended that the findings against the validity of the Will should extend to the sale agreement, as both were part of a scheme to deprive the rightful heirs of their property.
• The plaintiff pointed out that the Trial Court had rightly observed that the alleged sale agreement was a fabrication to take the property away from the reach of the heirs of Annapurnamma.

Defendant’s Arguments:

• The defendants argued that the suit for partition was not maintainable without a declaration against the sale agreement.
• They contended that the sale agreement was executed before the Will, and therefore, the finding on the invalidity of the Will should not affect the agreement.
• The defendants asserted that the execution of the agreement was proven by the testimony of the scribe, attestor, and the wife of the purchaser.
• They claimed that the payment of Rs. 40,000/- was established, and possession of the land was handed over to the purchaser.
• They argued that the High Court rightly reversed the Trial Court’s findings, which were based on conjectures and surmises.
• They submitted that the cist receipts placed on record also unfailingly prove that it was only defendant 15, and after him defendants 16 to 18, who remained in possession of the property in question and this property was not available for partition.

Sub-Submissions by the Parties

Issues Framed by the Supreme Court

The Supreme Court framed the following issues for determination:

1. Whether the suit for partition filed by the plaintiff-appellant was not maintainable for want of relief of declaration against the agreement for sale dated 05.11.1976 (Ex. B-10).
2. What is the effect and consequence of the fact that the legal representatives of defendant 2, who expired during the pendency of appeal in the High Court, have not been brought on record.
3. Whether the High Court was justified in reversing the findings of the Trial Court in relation to the said agreement for sale dated 05.11.1976 (Ex. B-10).

Treatment of the Issue by the Court

Authorities

Cases Relied Upon by the Court:

Legal Provisions Considered by the Court:

• Section 54 of the Transfer of Property Act, 1882: Defines “sale” and clarifies that a contract for sale does not create an interest in property.
• Order XXII of the Code of Civil Procedure, 1908: Governs the procedure for dealing with death, marriage, and insolvency of parties in a civil litigation.

Judgment

How each submission made by the Parties was treated by the Court?

How each authority was viewed by the Court?

• H. Venkatachala Iyengar v B.N. Thimmajamma [CITATION]: Used to examine the principles related to the proof of a Will, and the court found the Will to be suspicious.
• State of Rajasthan v. Rao Raja Kalyan Singh [CITATION]: Distinguished. The court held that while a legal question on maintainability can be raised, the plea in this case was baseless.
• Controller of Estate Duty v. Kantilal Trikamlal [CITATION]: Used to define partition, emphasizing the transformation of joint enjoyment into individual enjoyment.
• Bank of India v. Abhay D. Narottam [CITATION]: Used to clarify that an agreement for sale does not create an interest in the property.
• Shub Karan Bubna v. Sita Saran Bubna [CITATION]: Used to explain the main issues in a suit for partition, including the determination of share and entitlement to division.
• State of Punjab v. Nathu Ram [CITATION]: Used to explain the effect of the abatement of an appeal against one respondent in cases with multiple respondents, highlighting the issue of inconsistent decrees.
• Sardar Amarjit Singh Kalra v. Pramod Gupta [CITATION]: Used to underscore the importance of avoiding inconsistent decrees and to outline principles for dealing with abatement of appeals.
• Hemareddi v. Ramachandra Yallappa Hosmani [CITATION]: Used to emphasize that a decree passed in favour of the surviving appellant would be inconsistent with the decree that had attained finality between the deceased appellant and the defendants.

What weighed in the mind of the Court?

The Supreme Court’s decision was heavily influenced by the inconsistencies and implausibilities surrounding the alleged sale agreement (Ex. B-10). The court found that the High Court had failed to properly consider the close relationship between the disputed Will and the sale agreement, both of which were promoted by close relatives of defendant 4. The court also noted the lack of a plausible explanation for the non-registration of the sale deed, the suspicious nature of the financial transactions, and the absence of any steps by the alleged purchaser to seek specific performance of the agreement. The court emphasized that the agreement was intertwined with the rejected Will, and therefore, the repercussions of findings against the genuineness of the Will were bound to impact the agreement too.

Sentiment Analysis of Reasons Given by the Supreme Court

Fact:Law Ratio

The court’s decision was driven more by the factual inconsistencies and improbabilities in the case (60%) than by legal considerations alone (40%).

Logical Reasoning:

The Supreme Court found that the High Court had erred in reversing the Trial Court’s findings, as the sale agreement was found to be fabricated and untrustworthy. The court also highlighted that the appeal in the High Court was rendered incompetent due to the abatement against the deceased defendant. The court emphasized that the agreement was intertwined with the rejected Will and that the High Court failed to consider the suspicious circumstances surrounding both documents.

The Supreme Court stated, “The Trial Court had examined the matter in its correct perspective and had rightly come to the conclusion that this agreement for sale (Ex. B-10) was as invalid and untrustworthy as was the Will (Ex. B-9).”

The Court also observed, “The High Court has missed out this fundamental feature of the case that two documents, Will (Ex. B-9) and agreement for sale (Ex. B-10), as put forward by the contesting defendants cannot be analysed independent of each other.”

Furthermore, the court noted, “The factors noticed hereinabove jointly and severally operate against the genuineness of the agreement for sale Ex. B-10 and this document could only be rejected.”

Key Takeaways

• A sale agreement does not, by itself, create any interest in or charge on immovable property.
• In a suit for partition, a separate declaration against a disputed sale agreement is not necessary.
• The death of a party during an appeal can lead to abatement of the appeal if legal representatives are not substituted, especially in cases with joint decrees.
• Courts will scrutinize documents and transactions where there are suspicious circumstances, particularly when close relatives are involved.
• The onus of proving the genuineness of documents lies on those who present them.
• The court will consider the practical aspects of the case, such as the non-registration of the sale deed and the failure to seek specific performance.

Directions

The Supreme Court directed that:

• The appeal filed by defendants 16 to 18 in the High Court (AS No. 1887 of 1988) is dismissed as incompetent.
• The impugned decree of the High Court in relation to that appeal is reversed.
• The decree of the Trial Court stands restored.
• The plaintiff-appellant is entitled to the costs of this litigation in the High Court and in this Court from the contesting respondents, in addition to the costs awarded by the Trial Court.

Development of Law

The ratio decidendi of this case is that a mere agreement for sale does not create any interest in the property and does not prevent a rightful heir from claiming their share in a partition suit. This judgment reinforces the principle that courts will look beyond the documents and consider the surrounding circumstances, especially when there are suspicious elements. This case reaffirms the importance of proper documentation in property transactions and the rights of legal heirs in partition suits. The Supreme Court’s decision clarifies that the High Court’s reversal of the Trial Court’s findings was erroneous, and it reinstates the Trial Court’s decree, which had correctly identified the sale agreement as a fabrication.

Conclusion

In conclusion, the Supreme Court allowed the appeal, dismissing the High Court’s judgment and restoring the Trial Court’s decree. The court held that the disputed sale agreement was invalid and did not prevent the plaintiff from claiming her share of the inherited property. The judgment underscores the importance of thorough scrutiny in property disputes and the rights of legal heirs in partition suits.