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G.T. Girish vs. Y Subba Raju (D) By LRs and Another

Civil Appeal · 2022 INSC 51Decided 18 Jan 2022
Civil Appeal No. 380 of 2022
K.M. Joseph · Pamidighantam Sri Narasimha

Background

A residential site in Bangalore, allotted by the Bangalore Development Authority (BDA) to the first defendant under a lease-cum-sale agreement in 1979, became the subject of a 1982 agreement in which the first defendant promised to sell it to the plaintiff once she obtained her own sale deed from the BDA. When the first defendant later refused to execute the sale (claiming the plaintiff was in breach and forfeiting his advance), the plaintiff sued for specific performance. The first defendant died during the suit; her son eventually got a sale deed from the BDA and then sold the same property to a second defendant. The Trial Court refused specific performance and only ordered the refund of the plaintiff's payment, but the High Court reversed this and directed execution of the sale deed in the plaintiff's favour.

Decision Breakdown

The Supreme Court held that the underlying 1982 agreement was itself tainted with illegality: the site had been allotted by BDA specifically to house a homeless person, but the plaintiff, a contractor who admitted he intended to resell it through a nominee for profit, had no genuine intention to use it for that purpose, making the agreement unenforceable under the law governing such public housing allotments. The Court found the High Court erred in holding the suit for specific performance maintainable at all, and set aside its judgment restoring the sale deed to the plaintiff. However, since the defendants had not challenged the Trial Court's original decree, and to do complete justice between the parties using its Article 142 powers, the Court did not simply dismiss the case: it directed the appellants to pay the plaintiff's legal representatives Rs. 20,00,000 (in place of a full refund) within three months, with 8% annual interest if delayed, in lieu of returning the property.

Lesson Learnt

An agreement to sell land or a site that was itself allotted by a public authority for a specific public-welfare purpose (like housing) can be struck down as unenforceable if the buyer never intended to use it for that purpose but instead planned to resell for profit; courts can still use their equitable powers to ensure some fair monetary compensation even while refusing to enforce an illegal bargain.

Official source (sci.gov.in)View Judgment (PDF)

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