The Correspondence, Rbanms Educational Institution v. B. Gunashekar
Background
RBANMS Educational Institution, a 150-year-old charitable trust that has held and used a large Bangalore property since 1905 (originally leased, then formally conveyed in 1929), faced a suit from the respondents seeking a permanent injunction to stop the trust from creating third-party interests over the land. The respondents' claim rested entirely on an unregistered 2018 agreement to sell executed with third parties (not the trust) who were never even made parties to the suit, and for which Rs. 75 lakh advance was claimed to have been paid entirely in cash. The trust sought rejection of the plaint at the threshold, but both the trial court and the Karnataka High Court refused, holding the matter needed a full trial.
Decision Breakdown
The Supreme Court held the plaint should have been rejected outright, since an agreement to sell does not, by itself, create any interest in immovable property under Section 54 of the Transfer of Property Act: a settled principle. The respondents had no privity of contract with the trust, had not sued their own vendors, had not sought a declaration of title, and were not even in possession, making a bare suit for injunction against a party in continuous possession since 1905 legally unsustainable. The Court also flagged the suspicious circumstances (unimpleaded vendors, undocumented cash payment, a pattern of similar suits) as signs of a "champertous" and vexatious claim, and issued directions requiring courts and registration authorities to report large cash property transactions to Income Tax authorities under Section 269ST.
Lesson Learnt
A mere agreement to sell does not transfer any ownership interest in property: a buyer under such an agreement generally cannot sue a third party in possession without first pursuing their actual seller, and courts have a duty to reject clearly fictitious or legally barred lawsuits early rather than let them drag out through a full trial.