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Manjit Singh vs. Darshana Devi

Not available · 2024 INSC 895Decided 21 Nov 2024
Not available
Justice J.B. Pardiwala · Justice R. Mahadevan

Background

The respondent (original plaintiff) had entered into an unregistered oral agreement to purchase land from its owner in 1986, but before the sale could be completed, the owner sold the same land to the appellants (Manjit Singh and another) by a registered sale deed. The plaintiff sued for specific performance of her earlier agreement. The trial court ruled in her favour, the first appellate court reversed it in favour of the subsequent purchasers, and the Punjab and Haryana High Court, in second appeal, restored the decree for specific performance, holding that the subsequent purchasers were not "bona fide purchasers for value without notice" under Section 19(b) of the Specific Relief Act, 1963.

Decision Breakdown

The Supreme Court examined whether the appellants (subsequent purchasers) qualified for the statutory protection given to a bona fide purchaser who buys property in good faith without notice of an earlier contract. It found several red flags against the appellants: they were related to the seller, they made no inquiry despite the property being in someone else's possession, large parts of the sale consideration were paid in unexplained cash, and there was no evidence of funds coming from a traceable source. Relying on precedent on what constitutes "good faith" and "notice," the Court held that the appellants had failed to discharge their burden of proving they were innocent purchasers, and it dismissed the appeal, upholding the decree for specific performance.

Lesson Learnt

A buyer who purchases property without making basic inquiries about existing possession, prior agreements, or the source of the seller's title cannot later claim the legal protection meant for genuinely innocent purchasers. Courts will look closely at relationships between buyer and seller, unexplained cash payments, and any signs of collusion.

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

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