Case Note & Summary
The case involves a property dispute where the appellants (plaintiffs) purchased suit land from respondent no.2 (vendor) via a sale deed executed on 02.12.1985. The deed was presented for registration on 05.12.1985 but remained unregistered due to deficiency in stamp duty. Meanwhile, the vendor executed a second sale deed in favour of respondent no.1 on 03.12.2010 for the same property. The appellants came to know of this fraud on 08.06.2011 when respondent no.1 attempted to take possession. They immediately made inquiries, obtained a certified copy of the 2010 deed on 14.06.2011, and got their own deed registered on the same day. They filed a suit on 27.06.2011 seeking cancellation of the 2010 deed and perpetual injunction. The trial court dismissed the suit, holding that the contract with a minor was void and that the suit was barred by limitation. The first appellate court reversed this decision, but the High Court in second appeal restored the trial court's judgment. The Supreme Court allowed the appeal, holding that the registration of the 1985 deed relates back to its execution date, that the contract with a minor is voidable not void, that the suit was within limitation as fraud was discovered only in June 2011, and that the subsequent purchaser cannot claim bona fide purchaser status as the vendor had no title to convey. The Court set aside the High Court's judgment and restored the first appellate court's decree.
Headnote
A) Property Law - Sale Deed - Registration - Relates Back - The registration of a document relates back to the date of execution, not the date of registration, provided the document is presented for registration within the prescribed period. In this case, the sale deed executed on 02.12.1985 and presented on 05.12.1985, though registered on 14.06.2011, is deemed to have been registered from the date of execution. (Paras 4, 11) B) Contract Law - Minor's Contract - Voidable - A contract entered into by a minor is voidable at the option of the minor, not void ab initio, and can be ratified upon attaining majority. The sale deed in favour of appellant no.1 (aged 18) and his minor brother (represented by guardian) is not void, and the appellant no.1, being major, could enforce the contract. (Paras 4, 6, 7) C) Limitation Act - Fraud - Suit for Cancellation - Article 59 of the Limitation Act, 1963 - The period of limitation for a suit to cancel a document on the ground of fraud is three years from the date of knowledge of the fraud. The appellants came to know of the fraudulent conveyance on 08.06.2011 and filed the suit on 27.06.2011, which is within limitation. (Paras 4, 5) D) Transfer of Property Act - Bona Fide Purchaser - Fraud - A bona fide purchaser for value without notice cannot claim protection if the transfer is vitiated by fraud. The subsequent purchaser (respondent no.1) cannot derive any valid title as the vendor had already transferred the property earlier, and the subsequent sale was fraudulent. (Paras 4, 7, 11) E) Registration Act - Destruction of Documents - Section 85 - The provision regarding destruction of documents pending for two years is directory and not mandatory; non-destruction does not invalidate registration. (Para 7)
Issue of Consideration
Whether the sale deed executed in 1985 in favour of the appellants, though registered later in 2011, confers valid title and whether the subsequent sale deed of 2010 in favour of respondent no.1 is void due to fraud; also whether the suit is barred by limitation and whether the contract with a minor is void.
Final Decision
The Supreme Court allowed the appeal, set aside the judgment of the High Court, and restored the judgment of the First Appellate Court, thereby decreeing the suit for cancellation of the sale deed dated 03.12.2010 and granting perpetual injunction in favour of the appellants.
Law Points
- Registration relates back to date of execution
- Minor's contract voidable not void
- Fraud vitiates all transactions
- Bona fide purchaser for value without notice not protected against fraud
- Limitation for suit for cancellation of sale deed based on fraud starts from date of knowledge
