LEGAL ISSUE: Whether an Agreement to Sell land can be enforced through specific performance, especially when the full sale consideration was paid, possession was given, and the seller’s legal heirs refuse to execute the sale deed.
CASE TYPE: Civil – Specific Performance of Contract
Case Name: Shyam Kumar Inani vs. Vinod Agrawal & Ors.
Judgment Date: 12 November 2024
Introduction
Date of the Judgment: 12 November 2024
Citation: (2024) INSC 987
Judges: Vikram Nath, J., Prashant Kumar Mishra, J.
Can a seller’s legal heirs refuse to honor an Agreement to Sell land when the full sale consideration was paid, and possession was handed over to the purchasers? The Supreme Court recently addressed this question in a case involving multiple suits for specific performance. The core issue revolved around whether the High Court was correct in overturning the Trial Court’s decision to enforce the agreement. The Supreme Court bench, composed of Justices Vikram Nath and Prashant Kumar Mishra, delivered the judgment, with Justice Vikram Nath authoring the opinion.
Case Background
The dispute concerns 23.98 acres of land in village Godar Mau, District Bhopal. This land was originally part of a larger 27.56-acre parcel purchased by Sushila Bai in 1966. In 1990, Sushila Bai entered into separate Agreements to Sell portions of this land to six different individuals (the appellants), receiving full payment for each transaction. The appellants claimed they were given possession of their respective plots and were cultivating the land. However, after Sushila Bai’s death in 1992, her legal heirs (the respondents) refused to execute the sale deeds and instead sought mutation of the land in their names. The appellants then filed separate suits for specific performance of the Agreements to Sell.
Timeline:
| Date | Event |
|---|---|
| 29.04.1966 | Sushila Bai purchases 27.56 acres of land in village Godar Mau. |
| 30.08.1990 | Sushila Bai enters into Agreements to Sell portions of her land to six individuals (the appellants), receiving full payment. |
| 04.09.1990 | Sushila Devi executes a General Power of Attorney in favor of M.K. Maheshwari. |
| 25.12.1992 | Sushila Bai dies. |
| 28.04.1994 | Appellants issue notice to Sushila Devi’s legal heirs to execute the sale deeds. |
| May 1995 | Appellants file separate suits for specific performance. |
| 23.02.1999 | Tehsildar directs mutation of the names of the legal heirs. |
| 04.12.2000 | Trial Court passes an interim injunction order restraining alienation of the property. |
| 18.01.2001 | Legal heirs of Sushila Devi execute four separate sale deeds in favor of third parties, violating the injunction order. |
| 14.05.2001 | Trial Court decrees two of the suits in favor of the appellants. |
| 05.10.2001 | Trial Court decrees the remaining four suits in favor of the appellants. |
| 15.03.2012 | High Court allows the appeals, setting aside the Trial Court’s judgment and dismissing the suits. |
| 26.03.2012 & 31.03.2012 | Intervenors purchase the suit property. |
| 30.04.2012 | Supreme Court directs parties to maintain status quo. |
| 12.11.2024 | Supreme Court allows the appeals, restoring the Trial Court’s judgment. |
Course of Proceedings
The Trial Court decreed all the suits in favor of the appellants, finding that the Agreements to Sell were valid, the full consideration was paid, and the appellants were in possession of the land. The Trial Court also declared the sale deeds executed by the legal heirs of Sushila Devi in favor of third parties as null and void, as these sales were made in violation of an interim injunction order. However, the High Court reversed the Trial Court’s decision, holding that the Agreements to Sell were not adequately proved, the appellants did not establish possession, and the suits were barred by limitation. The High Court also noted that the sale consideration was below market rate and that the appellants did not enter the witness box. Aggrieved by the High Court’s decision, the appellants appealed to the Supreme Court.
Legal Framework
The case primarily involves the interpretation and application of the following legal provisions:
- Article 54 of the Limitation Act, 1963: This article prescribes the limitation period for suits for specific performance of a contract. It states that the limitation period is three years from the date fixed for performance, or if no such date is fixed, from the date when the plaintiff has notice that performance is refused.
- Section 16(c) of the Specific Relief Act, 1963: This section requires the plaintiff to prove that they have been ready and willing to perform their part of the contract.
Arguments
Appellants’ Arguments:
- The Agreements to Sell were validly executed and proved with oral and documentary evidence.
- The burden of proving fraud and misrepresentation lies with the respondents, which they failed to do.
- K.D. Maheshwari, one of the plaintiffs, testified in his suit and held the Power of Attorney for other plaintiffs, thus, had full knowledge of the facts.
- The appellants had paid the entire sale consideration and were given possession of the property. The only remaining obligation was the execution of the sale deed by the respondents.
- The suit was within the limitation period, as the cause of action arose when the respondents refused to execute the sale deed.
- The High Court erred in declaring the Agreement to Sell as void due to vagueness.
- The conduct of the respondents, especially the alienation of the property despite an injunction order, should be considered against them.
- The expert witness of the respondents could not definitively state that the signatures on the Agreement to Sell were not of Sushila Devi.
Respondents’ Arguments:
- The appellants failed to prove the execution and contents of the Agreements to Sell and the General Power of Attorney.
- Sushila Devi was an old, illiterate lady entitled to the protection of a Pardanashin lady.
- The plaintiffs did not enter the witness box, and the evidence of their Power of Attorney holders was insufficient to prove the execution of the Agreement to Sell.
- The appellants did not demonstrate readiness and willingness to perform their part of the contract.
- The suit was barred by limitation.
- The Agreements to Sell were vague and did not contain specific boundaries of the land.
- The sale deeds executed during the pendency of proceedings are not void but subject to adjudication.
Intervenor’s Arguments:
- The intervenors were bona fide purchasers for value without notice of the pending litigation.
- The doctrine of lis pendens does not apply as the sale took place after the High Court’s judgment and before the Supreme Court’s status quo order.
- The registered sale deeds in favor of the intervenors are valid.
- The Agreement to Sell was vague and lacked specific details regarding the boundaries, making it void.
- The Power of Attorney holder could not depose for acts done by the principal unless they had direct knowledge.
- The plaintiffs failed to demonstrate readiness and willingness to execute the sale deed.
| Main Submission | Sub-Submissions (Appellants) | Sub-Submissions (Respondents) | Sub-Submissions (Intervenors) |
|---|---|---|---|
| Validity of Agreement to Sell | ✓ Agreement was duly proved with oral and documentary evidence. ✓ Full consideration was paid. ✓ Possession was handed over. |
✓ Appellants failed to prove execution and contents. ✓ Sushila Devi was a Pardanashin lady. ✓ Agreement was vague. |
✓ Agreement was vague due to lack of specific boundaries. |
| Evidence and Testimony | ✓ K.D. Maheshwari had full knowledge of facts and testified. ✓ Expert witness could not deny Sushila Devi’s signature. |
✓ Plaintiffs did not enter witness box. ✓ Power of Attorney evidence was insufficient. |
✓ Power of Attorney holder cannot depose for principal’s actions. |
| Readiness and Willingness | ✓ Appellants had paid full consideration and were ready for sale deed execution. | ✓ Appellants did not make efforts to get sale deed executed. | ✓ Plaintiffs failed to demonstrate readiness and willingness. |
| Limitation | ✓ Suit was within time as cause of action arose upon refusal to execute sale deed. | ✓ Suit was barred by limitation. | |
| Status of Sale Deeds | ✓ Sale deeds by legal heirs were in violation of injunction and void. | ✓ Sale deeds during pendency are subject to adjudication. | ✓ Registered sale deeds are valid. |
| Bona Fide Purchaser | ✓ Intervenors were bona fide purchasers without notice. ✓ Lis pendens does not apply. |
||
| Conduct of Parties | ✓ Respondents’ conduct, especially violation of injunction, should be considered. |
Issues Framed by the Supreme Court
The Supreme Court framed the following key issues:
- Whether the Agreement to Sell dated 30.08.1990 was validly executed and proved?
- Whether the General Power of Attorney executed by Sushila Devi on 04.09.1990 created any doubt or suspicion on the conduct of the appellants?
- Whether the plaintiffs’ failure to enter the witness box in five of the suits calls for an adverse inference?
- Whether the suit was barred by limitation?
- Whether the forgery alleged by the defendants was proved with proper pleading and evidence?
- Whether Kailash Aggarwal’s (eldest son of Sushila Devi) failure to file a written statement or enter the witness box has an adverse effect on the defendants?
- Whether the High Court’s finding that Sushila Devi was a Pardanashin lady was pleaded and proved by the defendants?
- Whether the plaintiffs’ production of the original sale deed of 1966 and the original Rin Pustika of Sushila Devi is a relevant fact and adversely impacts the defendants?
- Whether the alienation by the legal heirs of Sushila Devi in violation of the interim injunction impacts the validity of the sale deeds and the conduct of the defendants?
- Whether there was any issue of readiness and willingness relevant when the purchaser had paid the entire sale consideration at the time of the Agreement to Sell?
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues:
| Issue | Court’s Decision & Reasoning |
|---|---|
| Whether the Agreement to Sell was validly executed and proved? | The Court held that the Agreement to Sell was validly proved by the appellants through oral and documentary evidence, including the testimony of witnesses and the handwriting expert. The defendants failed to establish their claim that it was a forged document. |
| Whether the General Power of Attorney created any suspicion? | The Court found no fault with the execution of the General Power of Attorney, stating that it was a registered document and that no suspicion could arise from it. The plaintiffs’ conduct in not immediately executing the sale deeds through the power of attorney indicated their bona fides. |
| Whether the plaintiffs’ failure to enter the witness box calls for an adverse inference? | The Court held that no adverse inference could be drawn as K.D. Maheshwari, one of the plaintiffs and Power of Attorney holder, was present throughout the transaction and was competent to testify. |
| Whether the suit was barred by limitation? | The Court found that the suit was not barred by limitation, as the limitation period started from the date of refusal to execute the sale deed, not from the date of the agreement. |
| Whether the forgery alleged by the defendants was proved? | The Court held that the defendants failed to prove forgery, as their expert could not definitively state that the signatures were not of Sushila Devi. |
| Whether Kailash Aggarwal’s failure to appear has an adverse effect? | The Court noted that Kailash Aggarwal’s failure to appear in the witness box indicated that the defendants were trying to avoid facing the real facts. |
| Whether Sushila Devi was a Pardanashin lady? | The Court found that there was no pleading or evidence to suggest that Sushila Devi was a Pardanashin lady. |
| Whether the plaintiffs’ possession of original documents is relevant? | The Court held that the plaintiffs’ possession of the original sale deed of 1966 and the Rin Pustika of Sushila Devi indicated a valid transaction. |
| Whether the violation of the injunction impacts the validity of the sale deeds? | The Court held that the sale deeds executed in violation of the interim injunction were void and that the conduct of the original defendants disentitled them from any discretion being exercised in their favor. |
| Whether readiness and willingness is relevant when full consideration was paid? | The Court held that when the entire sale consideration had already been paid, the issue of readiness and willingness was not relevant. |
Authorities
The Supreme Court considered the following authorities:
| Authority | Court | Legal Point | How it was used |
|---|---|---|---|
| Thiruvengadam Pillai vs. Navaneethammal and Anr. [ (2008) 4 SCC 250 ] | Supreme Court of India | Proof of Agreement to Sell | Distinguished on facts; the Court found that unlike the cited case, the appellants had sufficiently proved the Agreement to Sell with credible evidence. |
| MST. Kharbuja Kuer vs. Jangbahadur Rai & Ors. [AIR 1963 SC 1203] | Supreme Court of India | Protection of Pardanashin Lady | Distinguished on facts; the Court held that there was no evidence to suggest that Sushila Devi was a Pardanashin lady. |
| Krishna Mohan Kul vs. Pratima Maity and ors. [(2004) 9 SCC 468] | Supreme Court of India | Protection of Vulnerable Persons | Distinguished on facts; the Court held that Sushila Devi, although old and illiterate, was not incapacitated and had a history of independently conducting property transactions. |
| Vidyadhar Vishnupant Ratnaparkhi v. Manikrao Babarao Deshmukh and ors. [(1993) 3 SCC 573] | Supreme Court of India | Adverse Inference for Not Testifying | Distinguished on facts; the Court held that the plaintiffs were adequately represented by their Power of Attorney holders who had personal knowledge of the transaction. |
| Janki Vashdeo Bhojwani & Anr. V. Indusind Bank Ltd. And Anr. [(2005) 2 SCC 217] | Supreme Court of India | Limitations of Power of Attorney Holder | Distinguished on facts; the Court held that the Power of Attorney holder in this case had direct knowledge of the transaction and was competent to testify. |
| Man kaur vs. Hartar Singh Sangha [(2010) 10 SCC 512] | Supreme Court of India | Testimony of Power of Attorney Holder | Distinguished on facts; the Power of Attorney holder had personal knowledge of the transaction. |
| Rajesh Kumar vs. Anand Kumar [(2024) SCC OnLine SC 981] | Supreme Court of India | Non-Appearance of Plaintiff | Distinguished on facts; the Court held that the plaintiffs were adequately represented by their Power of Attorney holders who had personal knowledge of the transaction. |
| Thomson Press (India) Ltd. V. Nank Builders & Investors (P) Ltd. [(2013) 5 SCC 397] | Supreme Court of India | Effect of Transfers during Litigation | Distinguished on facts; the Court held that the doctrine of lis pendens ensures that transfers cannot prejudice the plaintiffs’ prior contractual rights. |
| Yogesh Goyanka v. Govind [(2024) SCC OnLine SC 1692] | Supreme Court of India | Impleadment of Transferee Pendente Lite | Distinguished on facts; the Court held that the transferees’ rights are subservient to those of the parties in the litigation. |
| Pawan Kumar Gupta v. Rochiram Nagdeo [AIR 1999 SC 1823] | Supreme Court of India | Burden of Proof in Fraud Allegations | Affirmed; the Court held that the burden of proving fraud lies with the party alleging it, and the defendants failed to substantiate their claims. |
| Article 54 of the Limitation Act, 1963 | Statute | Limitation for Specific Performance | Applied; the Court held that the suit was within the limitation period as it was filed within three years of the refusal to execute the sale deed. |
| Section 16(c) of the Specific Relief Act, 1963 | Statute | Readiness and Willingness | Applied; the Court held that the issue of readiness and willingness was not relevant when the entire sale consideration had already been paid. |
Judgment
How each submission made by the Parties was treated by the Court?
| Submission | Court’s Treatment |
|---|---|
| Appellants’ submission that the Agreement to Sell was validly executed and proved. | Accepted; the Court found that the appellants had sufficiently proved the agreement with oral and documentary evidence. |
| Appellants’ submission that the burden of proving fraud lies with the respondents. | Accepted; the Court held that the respondents failed to provide credible evidence of fraud. |
| Appellants’ submission that K.D. Maheshwari’s testimony was sufficient. | Accepted; the Court held that K.D. Maheshwari had full knowledge of the facts and was competent to testify. |
| Appellants’ submission that they had paid the entire sale consideration and were given possession. | Accepted; the Court found that the appellants had fulfilled their obligations and were entitled to specific performance. |
| Appellants’ submission that the suit was within the limitation period. | Accepted; the Court held that the suit was filed within three years of the refusal to execute the sale deed. |
| Appellants’ submission that the High Court erred in declaring the Agreement to Sell as void. | Accepted; the Court found no basis for declaring the agreement void. |
| Appellants’ submission that the respondents’ conduct should be considered against them. | Accepted; the Court noted the respondents’ violation of the injunction order. |
| Respondents’ submission that the appellants failed to prove the execution of the Agreement to Sell. | Rejected; the Court found that the appellants had sufficiently proved the execution of the agreement. |
| Respondents’ submission that Sushila Devi was a Pardanashin lady. | Rejected; the Court found no evidence to support this claim. |
| Respondents’ submission that the plaintiffs did not enter the witness box. | Rejected; the Court held that the Power of Attorney holders were competent to testify. |
| Respondents’ submission that the appellants did not demonstrate readiness and willingness. | Rejected; the Court held that this was not relevant as the full consideration had been paid. |
| Respondents’ submission that the suit was barred by limitation. | Rejected; the Court held that the suit was filed within the limitation period. |
| Respondents’ submission that the Agreement to Sell was vague. | Rejected; the Court found that the agreement was sufficiently clear. |
| Respondents’ submission that the sale deeds during pendency are subject to adjudication. | Partially accepted; the Court held that such transfers are subject to the doctrine of lis pendens and cannot prejudice the plaintiffs’ rights. |
| Intervenors’ submission that they were bona fide purchasers. | Rejected; the Court held that the intervenors’ rights were subservient to those of the appellants. |
| Intervenors’ submission that lis pendens does not apply. | Rejected; the Court held that the doctrine of lis pendens applied to the transfers made during the pendency of the litigation. |
| Intervenors’ submission that the registered sale deeds are valid. | Rejected; the Court held that the sale deeds were subject to the outcome of the litigation. |
| Intervenors’ submission that the Agreement to Sell was vague. | Rejected; the Court found that the agreement was sufficiently clear. |
| Intervenors’ submission that the Power of Attorney holder could not depose for the principal. | Rejected; the Court held that the Power of Attorney holders had direct knowledge of the transaction. |
| Intervenors’ submission that the plaintiffs failed to demonstrate readiness and willingness. | Rejected; the Court held that this was not relevant as the full consideration had been paid. |
How each authority was viewed by the Court?
- Thiruvengadam Pillai vs. Navaneethammal and Anr. [ (2008) 4 SCC 250 ]* – Distinguished on facts. The Court found that unlike the cited case, the appellants had sufficiently proved the Agreement to Sell with credible evidence.
- MST. Kharbuja Kuer vs. Jangbahadur Rai & Ors. [AIR 1963 SC 1203]* – Distinguished on facts. The Court held that there was no evidence to suggest that Sushila Devi was a Pardanashin lady.
- Krishna Mohan Kul vs. Pratima Maity and ors. [(2004) 9 SCC 468]* – Distinguished on facts. The Court held that Sushila Devi, although old and illiterate, was not incapacitated and had a history of independently conducting property transactions.
- Vidyadhar Vishnupant Ratnaparkhi v. Manikrao Babarao Deshmukh and ors. [(1993) 3 SCC 573]* – Distinguished on facts. The Court held that the plaintiffs were adequately represented by their Power of Attorney holders who had personal knowledge of the transaction.
- Janki Vashdeo Bhojwani & Anr. V. Indusind Bank Ltd. And Anr. [(2005) 2 SCC 217]* – Distinguished on facts. The Court held that the Power of Attorney holder in this case had direct knowledge of the transaction and was competent to testify.
- Man kaur vs. Hartar Singh Sangha [(2010) 10 SCC 512]* – Distinguished on facts; the Power of Attorney holder had personal knowledge of the transaction.
- Rajesh Kumar vs. Anand Kumar [(2024) SCC OnLine SC 981]* – Distinguished on facts; the Court held that the plaintiffs were adequately represented by their Power of Attorney holders who had personal knowledge of the transaction.
- Thomson Press (India) Ltd. V. Nank Builders & Investors (P) Ltd. [(2013) 5 SCC 397]* – Distinguished on facts; the Court held that the doctrine of lis pendens ensures that transfers cannot prejudice the plaintiffs’ prior contractual rights.
- Yogesh Goyanka v. Govind [(2024) SCC OnLine SC 1692]* – Distinguished on facts; the Court held that the transferees’ rights are subservient to those of the parties in the litigation.
- Pawan Kumar Gupta v. Rochiram Nagdeo [AIR 1999 SC 1823]* – Affirmed; the Court held that the burden of proving fraud lies with the party alleging it, and the defendants failed to substantiate their claims.
The Supreme Court, after analyzing the evidence and arguments, concluded that the High Court erred in reversing the Trial Court’s decision. The Court found that the appellants had sufficiently proved the execution of the Agreements to Sell, the payment of the full consideration, and their possession of the land. The Court also noted that the respondents had failed to prove their allegations of fraud and misrepresentation. The Court emphasized that the conduct of the original defendants in violating the injunction order was a significant factor against them. The Supreme Court held that the issue of readiness and willingness was not relevant in a case where the entire sale consideration had already been paid.
The Court stated, “The plaintiff -appellants, thus, discharged their burden of proving the transaction between Sushila Devi and the plaintiffs on 13.08.1990, the passing of the consideration, and the execution of Agreement to Sell.”
The Court also noted, “Any adverse inference drawn by the High Court for the reason that the plaintiffs did not enter the witness box to prove the Agreement to Sell, in our opinion, was completely misplaced.”
Further, the Court observed, “Such sale deed would be a void document. The conduct of the original defendants disentitles them from any discretion being exercised in their favour, as they blatantly and knowingly violated the interim injunction order.”
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the following factors:
- Proof of Agreement: The Court was convinced that the appellants had adequately proven the execution of the Agreements to Sell through credible evidence.
- Payment of Consideration: The fact that the appellants had paid the entire sale consideration at the time of the agreements was a significant factor.
- Possession: The Court noted that the appellants were given possession of the land, which further supported their claim.
- Conduct of Respondents: The Court strongly condemned the respondents for violating the interim injunction order and alienating the property to third parties.
- Failure to Prove Fraud: The respondents failed to provide credible evidence to support their allegations of fraud and misrepresentation.
- Competent Testimony: The Court found that the testimony of K.D. Maheshwari, who was both a plaintiff and a Power of Attorney holder, was sufficient to establish the facts of the case.
- Limitation: The Court clarified that the suit was filed within the prescribed limitation period.
Decision
The Supreme Court allowed the appeals and set aside the judgment of the High Court. The Court restored the Trial Court’s decree for specific performance in favor of the appellants. The Court held that the sale deeds executed by the legal heirs of Sushila Devi in favor of third parties were void. The Court ordered the respondents to execute the sale deeds in favor of the appellants within a specified period. The Court also ordered that the appellants would be entitled to possession of the property.
Flowchart of the Case
Agreements to Sell Executed (1990)
Full Payment Made
Sushila Bai Dies (1992)
Legal Heirs Refuse to Execute Sale Deeds
Appellants File Suits for Specific Performance
Trial Court Decrees Suits in Favor of Appellants
High Court Reverses Trial Court’s Decision
Supreme Court Allows Appeals
Restores Trial Court’s Decree
Conclusion
The Supreme Court’s judgment in Shyam Kumar Inani vs. Vinod Agrawal (2024) underscores the importance of upholding contractual obligations, especially in cases involving the sale of land. The Court emphasized that when a seller has received full payment and handed over possession of the property, the seller’s legal heirs cannot refuse to execute the sale deed. The judgment also highlights the significance of the doctrine of lis pendens, which prevents parties from alienating property during litigation to the prejudice of the other party. Further, the Court’s decision reaffirms that when the entire sale consideration has been paid, the issue of readiness and willingness is not relevant. This case serves as a reminder that courts will enforce valid agreements to sell and will not allow parties to circumvent their contractual obligations through technicalities or by violating court orders.