P. Ramasubbamma vs. V. Vijayalakshmi & Ors.
Background
The appellant had agreed in 2005 to buy a property from its owner (defendant No. 1) for Rs. 29 lakh and paid Rs. 26 lakh as advance, which the owner admitted to in court. However, the owner's power-of-attorney holder (defendant No. 2) later secretly sold the same property to two other people, his own sisters-in-law (defendant Nos. 3 and 4), to defeat the buyer's rights. The trial court believed the buyer, decreed specific performance of the sale agreement, and declared the later sale deeds not binding on her. On appeal, the Karnataka High Court reversed this, holding that since the buyer had not specifically prayed for cancellation of those later sale deeds, the trial court could not have declared them non-binding.
Decision Breakdown
The Supreme Court held that once the original owner admitted executing the sale agreement and receiving substantial advance payment, nothing more needed to be proved by the buyer, and the trial court was right to decree specific performance on that basis alone. It clarified that a buyer suing for specific performance does not need to separately seek cancellation of a subsequent purchaser's sale deed. It is enough to add that purchaser as a party and seek a direction that they join in transferring title, a principle settled in earlier rulings including Lala Durga Prasad. The Court also found that specific issues on the later sale deeds had in fact been framed and decided by the trial court, which found them to be sham ("nominal") transactions since defendant Nos. 3 and 4 never proved they paid any real consideration and never even entered the witness box. Concluding the High Court had ignored these admitted and proven facts, the Supreme Court set aside the High Court's judgment and restored the trial court's decree of specific performance.
Lesson Learnt
When a property owner admits signing a sale agreement and receiving payment, courts will enforce that agreement; a buyer need not separately sue to cancel a later, secretly executed sale deed to a third party: simply including that person in the specific performance suit and proving the later sale was a sham is enough to protect the buyer's rights.