Case Note & Summary
The case involves a dispute over the specific performance of an agreement for sale of a flat. The flat purchaser, Dr. Arun Subrao Prabhu, entered into an agreement for sale with the developer, Rizvi Builders, on 6th March 1980 for the purchase of a flat. The flat purchaser paid part of the consideration and was put in possession. However, the developer failed to execute the sale deed. Subsequently, on 4th April 1988, the developer entered into another agreement for sale with the Gulabanis (defendant nos. 2 and 3) for the same flat. The flat purchaser filed a suit seeking a declaration that the 1980 agreement was valid and binding, that the 1988 agreement was bogus and invalid, and for specific performance of the 1980 agreement. The learned Single Judge decreed the suit in favor of the flat purchaser, subject to deposit of the balance consideration of Rs.1.44 lakhs. The developer and the Gulabanis appealed. The Division Bench upheld the judgment, holding that the flat purchaser had proved his case and that the Gulabanis failed to prove that the subsequent agreement was bona fide. The court also applied the doctrine of lis pendens, as the suit was pending when the 1988 agreement was executed. The appeals were dismissed.
Headnote
A) Specific Relief Act, 1963 - Section 20 - Specific Performance - Agreement for Sale - The flat purchaser sought specific performance of an agreement for sale dated 6th March 1980 for a flat. The court held that the agreement was valid, subsisting, and binding, and directed the developer and subsequent purchasers to execute the sale deed in favor of the flat purchaser upon deposit of balance consideration. (Paras 1-3)
B) Transfer of Property Act, 1882 - Section 52 - Lis Pendens - The subsequent agreement for sale dated 4th April 1988 was entered into during the pendency of the suit. The court held that the subsequent purchasers (Gulabanis) were bound by the doctrine of lis pendens and could not claim any rights over the property. (Paras 2-3)
C) Evidence Act, 1872 - Section 101 - Burden of Proof - The burden of proving that the subsequent agreement was bona fide and for consideration was on the Gulabanis. They failed to discharge this burden, and the court held the agreement to be bogus and invalid. (Paras 2-3)
Issue of Consideration
Whether the flat purchaser is entitled to specific performance of the agreement for sale dated 6th March 1980, and whether the subsequent agreement for sale dated 4th April 1988 between the developer and the Gulabanis is valid and binding.
Final Decision
Appeals dismissed. The impugned judgment dated 10th September 2009 passed by the learned Single Judge decreeing the suit in terms of prayer clauses (a), (ai) and (b) subject to deposit of Rs.1.44 lakhs is upheld.
Law Points
- Specific performance of agreement for sale
- validity of subsequent agreement
- burden of proof on subsequent purchaser
- constructive notice
- lis pendens
Case Details
2022 LawText (BOM) (01) 52
Appeal No.523 of 2009 in Suit No.1336 of 1988, Appeal No.524 of 2009 in Suit No.1336 of 1988, Notice of Motion No.4030 of 2009
S.J. Kathawalla, Milind N. Jadhav
Mr. T.N. Subramanian, Senior Advocate with Mr. Akash Rebello, Mr. Prashant Dingrani, Mr. Anand Pai i/by Mr. Mahesh R. Mishra for Appellant in APP 523 of 2009; Dr. Virendra Tulzapurkar, Senior Advocate with Ms. Lata Dhruv, Ms. Khyati Pandit i/by Dhru and Co. for Respondent No.1 in both Appeals
Rizvi Builders (in Appeal No.523/2009); M.M. Gulabani and Pushpa M. Gulabani (in Appeal No.524/2009)
Arun Subrao Prabhu (flat purchaser)
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Nature of Litigation
Civil suit for specific performance of an agreement for sale of a flat, declaration of validity of agreement, and declaration that subsequent agreement is bogus.
Remedy Sought
Flat purchaser sought declaration that agreement for sale dated 6th March 1980 is valid and binding, declaration that agreement dated 4th April 1988 is bogus and invalid, and decree for specific performance of the 1980 agreement.
Filing Reason
Developer failed to execute sale deed despite payment of part consideration and possession; developer entered into another agreement with third parties for the same flat.
Previous Decisions
Learned Single Judge decreed the suit in favor of the flat purchaser on 10th September 2009, subject to deposit of balance consideration of Rs.1.44 lakhs.
Issues
Whether the agreement for sale dated 6th March 1980 is valid and binding on the defendants?
Whether the agreement for sale dated 4th April 1988 between the developer and the Gulabanis is bogus and invalid?
Whether the flat purchaser is entitled to specific performance of the 1980 agreement?
Submissions/Arguments
Flat purchaser argued that the 1980 agreement was valid, he paid part consideration and was put in possession, and the developer failed to execute sale deed.
Developer argued that the 1980 agreement was not binding and that the subsequent agreement with Gulabanis was valid.
Gulabanis argued that they were bona fide purchasers for value without notice.
Ratio Decidendi
The flat purchaser proved the validity of the 1980 agreement and his readiness and willingness to perform. The subsequent purchasers (Gulabanis) failed to prove that the 1988 agreement was bona fide and for consideration. The doctrine of lis pendens applies as the suit was pending when the 1988 agreement was executed, thus the Gulabanis are bound by the decree.
Judgment Excerpts
These Appeals have been preferred against the Judgment dated 10th September, 2009 (‘the impugned Judgment’) passed by the learned Single Judge of this Court in the captioned Suit filed by Dr. Arun Subrao Prabhu (Original Plaintiff ) – hereinafter referred to as the ‘flat purchaser’ (the impugned Judgment).
By the impugned Judgment, the captioned Suit was decreed in terms of prayer clauses (a), (ai) and (b) of the Plaint, subject to the condition that the flat purchaser shall within a period of four weeks deposit the balance consideration payable under the agreement i.e. Rs.1.44 Lakhs with the Prothonotary and Senior Master of this Court.
Procedural History
Suit No.1336 of 1988 filed by flat purchaser for specific performance and declarations. Learned Single Judge decreed suit on 10th September 2009. Developer filed Appeal No.523/2009 and Gulabanis filed Appeal No.524/2009 against the judgment. Division Bench heard appeals and dismissed them on 28th January 2022.
Acts & Sections
- Specific Relief Act, 1963: Section 20
- Transfer of Property Act, 1882: Section 52
- Indian Evidence Act, 1872: Section 101
