Nadiminti Suryanarayan Murthy (Dead) v. Kothurthi Krishna Bhaskara Rao
Background
The owners of a house in Amalapuram, Andhra Pradesh, agreed in January 1983 to sell it to the plaintiff for Rs. 46,000, who paid an advance and arranged the balance. Instead of honoring that agreement, the owners sold the same house a few weeks later to the original defendant No. 6 (the appellant's predecessor) for Rs. 45,000. The plaintiff sued for specific performance of his earlier agreement, and after decades of litigation the trial court and then the High Court ruled in his favor against the appellant, who appealed to the Supreme Court.
Decision Breakdown
The Supreme Court upheld the decree of specific performance in the plaintiff's favor, agreeing that the first (earlier) sale agreement took priority and that the later sale to defendant No. 6 could not defeat the plaintiff's rights. However, since defendant No. 6 had already paid Rs. 45,000 to the original owners in good faith for a sale that could not now be completed, the Court, invoking its special power under Article 142 of the Constitution to "do complete justice", directed the original owners to refund that amount to defendant No. 6, while also directing defendant No. 6 to join in executing the sale deed in the plaintiff's favor so that the plaintiff finally received clear title. The appeal was finally disposed of on these modified terms, bringing an end to litigation that had lasted more than three decades.
Lesson Learnt
A seller cannot defeat an earlier, valid agreement to sell property simply by selling it again to someone else later; but courts can use their equitable powers to ensure a later, good-faith buyer who loses the property is not left out of pocket, by ordering the seller to refund the money received.