Case Note & Summary
These appeals before the Supreme Court arose from a common judgment of the High Court of Karnataka which allowed two appeals filed by the original vendees and granted specific performance of an agreement to sell dated 28.04.2000. The High Court set aside the trial court's dismissal of the suit and held the appellants, who were subsequent purchasers, not to be bona fide purchasers for value without notice. The dispute centered on an unregistered agreement to sell executed by the original vendors in favour of the original vendees for 354 acres of agricultural land for a total consideration of Rs. 26,95,501. The original vendees paid Rs. 2,00,000 as earnest money and agreed to pay an additional Rs. 5,00,000 at registration, with the balance at the time of sale deed execution. The sale was to be completed within two months after the vendors informed the vendees about conversion of the land from new tenure to old tenure in the record of rights, surveying and fixing boundaries, and relocating nineteen tenants residing on the land. Between 2000 and 2001, the vendees paid further amounts aggregating Rs. 8,12,500. In March 2001, a nephew of the vendors filed a suit for partition and possession including the subject land and obtained a status quo order on 11.04.2001. The vendees were not parties to that suit and their impleadment application was rejected in 2005. Meanwhile, on 10.03.2003, the vendors sent a legal notice terminating the agreement, citing the pending litigation and death of one vendor, calling upon the vendees to take back earnest money and treat the agreement as cancelled. The vendees replied on 21.03.2003, asserting they had fulfilled their obligations, were always ready and willing, and that the status quo order only suspended performance not rendered the agreement unenforceable. In February 2007, the third-party suit was withdrawn and the status quo order vacated. Shortly thereafter, on 20.02.2007 and 02.03.2007, the vendors sold the land to subsequent purchasers for Rs. 71,00,000. The original vendees then filed Original Suit No. 36 of 2007 on 09.07.2007 seeking specific performance or refund with damages. The trial court dismissed the suit, but the High Court reversed that decree, granting specific performance and holding the subsequent purchasers not bona fide. The Supreme Court heard the appeals of the subsequent purchasers. The court examined issues including whether the vendees were obliged to challenge the termination, whether the agreement was determinable, the bona fides of the subsequent purchasers, and the readiness and willingness of the vendees. The extracted portion of the judgment ends before the court's analysis and final decision.
Issue of Consideration
Whether the original vendees' failure to challenge the termination of the agreement to sell affected their suit for specific performance; whether the agreement to sell dated 28.04.2000 was determinable in nature; whether the subsequent purchasers were bona fide purchasers for value without notice; whether the original vendees were ready and willing to perform their part of the contract.
Law Points
- failure to seek declaration of invalid termination of agreement to sell
- determinable nature of agreement to sell
- bona fide purchaser for value without notice
- readiness and willingness to perform contract
- effect of status quo order on performance
- obligation to challenge termination
- unregistered agreement to sell
Case Details
2025 LawText (SC) (11) 45
Civil Appeal No. 13507–13508 of 2025 (Arising out of Special Leave Petition (C) Nos. 29405-29406 of 2017)
K.S. Manjunath And Others
Moosavirappa @ Muttanna Chennappa Batil, Since Deceased By His Lrs And Others
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Nature of Litigation
Civil suit for specific performance of an unregistered agreement to sell agricultural land.
Remedy Sought
Original vendees sought specific performance of the agreement to sell dated 28.04.2000 against the original vendors and subsequent purchasers; alternatively, refund of amounts paid with damages.
Filing Reason
The original vendors terminated the agreement to sell and executed sale deeds in favour of subsequent purchasers, leading the original vendees to file suit to enforce the agreement.
Previous Decisions
The trial court dismissed the suit. The High Court of Karnataka allowed the appeals of the original vendees, set aside the trial court's decree, granted specific performance, and held that the subsequent purchasers were not bona fide purchasers for value without notice.
Issues
Whether the failure of the original vendees to challenge the legality and validity of termination of the agreement to sell in the suit affected their claim for specific performance.
Whether the agreement to sell dated 28.04.2000 was determinable in nature.
Whether the subsequent purchasers were bona fide purchasers for value without notice of the prior agreement.
Whether the original vendees were ready and willing to perform their part of the contract.
Judgment Excerpts
In view of the pending litigation and death of Smt. Godavari urf Mahalakshmi G. Kulkarni, my clients are not in a position to go ahead with the transaction as per agreement of sale deed dt. 28.04.2000. My clients cannot wait for an indefinite period. Furthermore they cannot be definite about their share in the land in view of the litigation and it is also subject to the decision of the court. Hence, my clients are unable to execute a sale deed in respect of the land in question as per agreement dt. 28.04.2000. Under the circumstances, you are hereby called upon to take back your earnest money and to treat the agreement of sale dt. 28.04.2000 as cancelled within a period of one month from the date of receipt of this notice. Failing which the agreement of sale dt. 28.04.2000 is deemed to be cancelled and the legal effects and rights of my clients will take their own course and my clients will be at liberty to deal with the above said land in accordance with law.
That they had fulfilled the terms of the ATS by getting the subject land surveyed, measured, and boundaries fixed, and carrying out the conversion of tenure of the subject land which otherwise was the obligation of the original vendors under the ATS; That they had time and again requested the original vendors to perform their part of the obligation of executing the sale deed; That they were always ready and willing to perform their part of the contract; That the further performance of the ATS had to be suspended due to the order of status quo passed in the Original Suit No. 30 of 2001 and the same would not render the ATS unenforceable; That the original vendors were duty bound to execute the sale deed in their favour after the disposal of the Original Suit No. 30 of 2001; That the death of one of the original vendors would not have the effect of cancellation of the ATS because the legal heirs would be bound to perform in that regard; That for all the above grounds the question of taking back the earnest money did not arise.
The plaintiffs pray: - (a) That the defendants be specifically ordered to perform the agreement dated 28.04.2000 and do all acts necessary to put the plaintiffs in full possession of the suit property as owners at the cost of the plaintiffs after receiving the balance consideration from the plaintiffs; (b) That the above acts be got done through Court Commissioner in case defendant/s fail to execute and register the sale deed; (c) In case for any reason whatsoever the court comes to the conclusion that the specific performance cannot be ordered, then the court may be pleased to order refund of amounts paid with damages and compensation which is total sum of Rs. 26,95,501/-; (d) Costs and such other reliefs as court deems fit and proper.
Procedural History
On 28.04.2000, an unregistered agreement to sell was executed by the original vendors in favour of the original vendees. On 24.03.2001, a third party filed Original Suit No. 30 of 2001 for partition and possession including the subject land, and an order of status quo was passed on 11.04.2001. The original vendees' impleadment application in that suit was rejected on 16.03.2005, and their writ petition against rejection was dismissed on 18.07.2005. On 10.03.2003, the vendors sent a legal notice terminating the agreement. The vendees replied on 21.03.2003. On 14.02.2007, the third-party suit was dismissed as withdrawn and the status quo order was vacated. On 20.02.2007 and 02.03.2007, the vendors sold the land to subsequent purchasers. On 09.07.2007, the original vendees filed Original Suit No. 36 of 2007 for specific performance. The trial court dismissed the suit on 21.07.2012. The High Court of Karnataka allowed the vendees' appeals and granted specific performance, holding the subsequent purchasers not bona fide. The subsequent purchasers appealed to the Supreme Court, which granted leave.
