Bench

Justice Indu Malhotra, Justice L. Nageswara Rao

Date of Judgment

9th July 2020

Provisions

Order VII Rule 11(a) & 11(d), CPC, Section 73AA of Land Revenue Code, The Limitation Act, 1963

Cases Referred

Vidyadhar v. Manikrao [(1999) 3 SCC 573], Chandrashankar Manishankar vs. Abhla Mathur and others [AIR (39) 1952 Bombay 56]

Introduction

In Dahiben v. Arvindbhai Kalyanji Bhanusali & Ors., the Supreme Court of India stated that mere non-payment of the full amount of consideration cannot be held as a ground for cancellation of sale deed.

Factual Background

• The Supreme Court was considering an appeal from a Division Bench of the Gujarat High Court, which had upheld the Trial Court’s judgment admitting an O7R11 application and ruling that the Appellants’ complaint was prohibited by limitation. In the recent case, the plaintiff owned a piece of agricultural property in the hamlet of Mota Varachha, Surat Sub-District. According to Section 73AA of the Land Revenue Code, the land was subject to restricted tenure. The Plaintiffs applied to the collector of the district for permission to sell the property to Respondent 1. The collector allowed the property to be sold and set the sale price according to the jantri issued by the State Government. The purchaser was required to pay via cheque, with a reference to the payment in the Sale Deed. The plaintiffs sold the property to respondent 1 after obtaining all necessary permissions. Respondent 1 issued 36 cheques for the payment of Rs.1,74,02,000 towards the sale considerations in the favour of Plaintiff.
• Later, Respondent No. 1 got the Land from Plaintiff and sold it to a group of third parties, comprising Respondents Nos. 2 and 3, in a transaction dated April 1, 2013, for Rs.2,01,00,000.
• The Plaintiff filed a suit before the Principal Civil Judge of Surat in December 2014, more than five years after the Sale Deed was executed, alleging that the sale consideration for the Land had not been paid in full by Respondent No.1 and praying, inter alia (among other things), that the Sale Deed is declared void, illegal, and ineffective. Respondents No. 2 and 3 were impleaded in the complaint since the Land had already been sold to them and was in their possession at the time the suit was filed.
• The Plaintiffs claimed that they were completely illiterate, unable to read or write, and could only make a thumb imprint on the Sale Deed dated 02.07.2009. The Sale Deed was gotten without full consideration being paid. Just Rs. 40,000 had been paid through six checks by Respondent No. 1, and the rest 30 checks adding up to Rs. 1,73,62,000 were false checks.
• On the grounds that the Suit was precluded by limitation and that no cause of action had been disclosed in the plaint, the Respondent filed an Application for Rejection of the Plaint under O7R11 (Application for Rejection).
• The Trial Court determined that the time restriction for filing the lawsuit was three years from the date of the sale deed’s execution on July 2, 2009. The Trial Court further highlighted that the lawsuit was filed on December 15, 2014, and so was time-barred. The Trial Court dismissed the lawsuit and granted the Application for rejection. The Appellants sought an appeal with the Gujarat High Court after being aggrieved by the Trial Court’s decision, which in turn upheld the decision. As a result, Plaintiff petitioned the Supreme Court to set aside the High Court’s decision.

Issues Raised

1. Whether non-payment of the part of sale consideration is a ground for cancellation of registered sale deed?
2. Whether the case filed by Plaintiff is barred by the Limitation Act?

SC Analysis and Judgment

The Supreme Court outlined the law that applies while determining an application under Order VII Rule 11 CPC. The court cited Vidyadhar v. Manikrao¹ and Section 54 of the Transfer of Property Act, 1882, saying that the words “price paid or promised or part paid and part promised” indicate that actual payment of the entire price at the time of the execution of the Sale Deed is not a sine qua non for the sale to be completed. The Court stated that in the Plaint, the Plaintiffs established a case of claimed non-payment of a portion of the selling consideration and requested relief of cancellation of the Sale Deed on this basis. Even in case, the whole purchase price is not paid, as long as the paperwork is registered and signed, the sale is done, and the title transfers to the transferee under the transaction. If a portion of the sale price is not paid, the transaction’s validity is unaffected. The parties must intend to transfer ownership of the property in exchange for a price that can be paid now or in the future to be regarded as a sale. The Plaintiffs might have other remedies in law for recovery of the equity consideration but could not be allowed the relief of cancellation of the registered Sale Deed.

Further, the SC held that Plaintiff’s claim that it first learned of the alleged fraud in 2014 after receiving the index of the Sale Deed was completely false because receiving the index would not be a cause of action for initiating the complaint. It was also noted that Plaintiff had omitted the date of execution and registration of the Sale Deed on purpose. As a result, it determined that the present case was a classic situation in which the Plaintiffs tried to build up an artificial cause of action to bring the claim within limitation by skillful writing of the plaint and that it should be dismissed at the threshold.

In Chandrashankar Manishankar vs. Abhla Mathur and Ors.², it was held that the document’s recital indicating payment of the consideration may be false, but it doesn’t make the document invalid. The entire amount does not have to be paid for the sale to be effective, since Section 54 of the Transfer of Property Act stipulates that the price may be paid or pledged in whole or in part. The Court further concluded that if the consideration was not paid but the document demonstrates that there was an intention to pay, the document is not declared invalid because the consideration was not paid. If, on the other hand, there was no intention of paying any consideration, the document is null and void.

The bench so on held that the Plaintiffs’ current lawsuit is a misuse of the court’s procedure and devoid of any merit. In light of the foregoing discussion, the instant Civil Appeal is rejected, with costs of Rs. 1,00,000/- payable by the Appellant to Respondents Nos. 2 and 3 within twelve weeks of this Judgment’s date.

Conclusion

In the recent case, the court determined the fact that the parties should not waste the time of the court as already there is a huge number of cases pending before the court and the lawyers of the parties should reject the plaint at the threshold if it does not disclose any cause of action. Plaintiff should be diligent in safeguarding its legal rights and making sure that legal actions are started before the statute of limitations runs out. In addition, the plaintiff should make certain that the plaint is well constructed in order to highlight important problems. If the ownership of the property has been transferred to the other party, even if the money has not been paid in whole or in half, the party has no right to launch a lawsuit against the other, claiming that the contract is void or illegitimate. If the plaint is submitted beyond the deadline if the averments do not reveal a valid cause of action, the Courts will not hesitate to dismiss the case.

Citations

1. (1999) 3 SCC 573
2. AIR (39) 1952 Bombay 56

Analysis by Hemant Bohra student at School of Law, Lovely Professional University, Punjab.