This article relates to what the proper form of a decree should be where an agreement purchaser (plaintiff/vendee) succeeds in a suit for the specific performance of an agreement to sell against an agreement seller (defendant/ vendor) and a subsequent purchaser (with notice of prior agreement of sale).
On November 18, 1953, a three-judge bench of the Supreme Court of India in Lala Durga Prasad & Anr. vs. Lala Deep Chand & Ors. [AIR 1954 SC 75] held that in such an event, the proper form of a decree to be passed is to direct the specific performance of the contract between the vendor and the vendee and to direct the subsequent purchaser to join in the conveyance so as to pass on the title, which resides in the subsequent purchaser, to the vendee.
The Supreme Court noted that in relation to the vendee’s suit for specific performance, the practice of courts in India had not been uniform and that there were three distinct points of view.
According to one point of view, the form of a decree is to declare the subsequent purchase void as against the vendee and direct a conveyance by the vendor alone. A second view considers that both the vendor and the subsequent purchaser should join in the conveyance, while the third point of view limits the execution of the conveyance to the subsequent purchaser alone.
The Supreme Court analysed each form and noted that after the sale by the vendor to the subsequent purchaser, the title to the property validly passes from the vendor and resides in the subsequent purchaser. The sale to the subsequent purchaser is not void but only voidable at the option of the vendee. As the title no longer rests in the vendor, it would be illogical from a conveyancing point of view to compel him to convey the title to the vendee unless steps are taken to re-vest the title in him either by cancellation of the subsequent sale or by reconveyance from the subsequent purchaser to him.
The Supreme Court noted that it was not aware of any case in which a reconveyance to the vendor was ordered. As regards the cancellation of the subsequent sale and conveyance to the vendee by the vendor in accordance with the contract of sale of which the vendee sought specific performance, the Supreme Court was of the view that though this option sounds logical, the objection to it is that it might bring in a train of complications between the vendor and the subsequent purchaser as there may be covenants in the deed between them. As such, would be inequitable to disturb the same by a cancellation of their deed, the Court opined. Accordingly, the Supreme Court did not consider this as a desirable solution.
The second option, that is, conveyance by the subsequent purchaser alone to the vendee was also not found to be a desirable solution. Though this option would have the effect of vesting title of the property in the vendee, it might be inequitable to compel the subsequent purchaser to enter into terms and covenants of the vendor's agreement with the vendee to which he would never have agreed had he been a free agent. Further, if the original contract is varied by altering or omitting such terms, the Court would be remaking the contract, a thing the Court has no power to do, and in any case, it would no longer be specifically enforcing the original contract but a different one.
The Supreme Court was of the opinion that the proper form of decree would be to direct the specific performance of the contract between the vendor and the vendee and direct the subsequent purchaser to join in the conveyance so as to pass on the title which resides in the subsequent purchaser to the vendee. The subsequent purchaser would not join in any special covenants made between the vendee and the vendor. All that the subsequent purchaser would do is pass on his title in the property to the vendee.
In RC Chandiok & Anr. vs. Chuni Lal Sabharwal & Ors. [(1970) 3 SCC 140] and Dwarka Prasad Singh & Ors. vs. Harikant Prasad Singh & Ors. [(1973) 1 SCC 179], the Supreme Court held that in a suit instituted by a vendee against the vendor and a subsequent purchaser for specific performance of a contract of sale, if the vendee succeeds, the proper form of decree to be passed should be in the same form as indicated in Durga Prasad (supra).
The Supreme Court in Durga Prasad (supra), while laying down what should be the proper form of a decree in a suit for the specific performance of an agreement of sale, where the vendor, after the agreement to sell with the vendee, has conveyed the title in the property to a subsequent purchaser, expressly considered cases where the relief of cancellation of a conveyance deed/sale deed in favour of a subsequent purchaser was sought. The Supreme Court disapproved of the same and held the proper form of the decree to be directing specific performance against the subsequent purchaser as well.
However, despite the disapproval of the Supreme Court, courts in India are entertaining suits for specific performance where the vendee seeks the relief of declaration of invalidity or cancellation of the sale deed in favour of the subsequent purchaser.
In some cases, courts have modified the decree in terms of Durga Prasad (supra) using their discretionary powers, even though the same is not in accordance with the pleadings and relief sought by the vendee. The Supreme Court in certain cases including Rathnavathi & Anr. vs. Kavita Ganashamdas [(2015) 5 SCC 223], Nadiminti Suryanarayan Murthy vs. Kothurthi Krishna Bhaskara Rao & Ors. [(2017) 9 SCC 622] and Vijay A. Mittal & Ors. vs. Kulwant Rai & Anr. [(2019) 3 SCC 520] have following the ratio of Durga Prasad (supra) and directed both the vendor and the subsequent purchaser to jointly execute the sale deed in favour of the vendee, even though such a relief had not been sought but the relief of cancellation of the sale deed between the vendor and the subsequent purchaser was sought. Durga Prasad (supra) has recently also been followed in the case of P. Ramasubbamma Vs. V. Vijayalakshmi & Ors. [(2022) 7 SCC 384].
The judgment in Durga Prasad (supra) is also in consonance with Section 19 (1) (b) of the Specific Relief Act, 1963 (“Act”) which provides that the specific performance of a contract may be enforced against the subsequent purchaser. Accordingly, the remedy of a vendee against a subsequent purchaser is only of specific performance under Section 19(b) of the Act and not the relief of cancellation of the conveyance deed or the sale deed in favour of the subsequent purchaser or a declaration that the title created in favour of such subsequent purchaser is null and void.
A different view was taken in the case of B. Vijaya Bharathi vs. P. Savitri & Ors. [(2018) 11 SCC 761], where the Supreme Court held that when a vendee does not seek the cancellation of the sale deed between the vendor and the subsequent purchaser, the vendee would not be entitled to the relief of specific performance. This finding appears to be per incuriam as the Supreme Court failed to consider the judgment passed in Durga Prasad (supra) as well as the subsequent judgments mentioned hereinabove.
Even though almost 70 years have passed since the judgment in Durga Prasad (supra), wherein the law was clarified by a three-judge bench of the Supreme Court regarding the proper form of the decree to be passed in suits for specific performance, vendees are still seeking the relief of cancellation of the conveyance deed or the sale deed in favour of the subsequent purchaser or a declaration that the conveyance deed or sale deed be declared null and void and are filling pleadings and seeking relief in suits which are de hors the form in which the decree has to be passed.
Further, even Courts are entertaining such suits and modifying decrees to bring them in line with the ratio in Durga Prasad (supra), ignoring the well-settled law that where the law provides for an act to be done in a particular manner, it has to be done in that manner only.
If the vendee claims relief in any other manner, the Court ought to reject the said relief. Instead of passing a modified decree in terms of the ratio of Durga Prasad (supra), Courts should, before entertaining such suits, direct the vendee to amend the plaint in accordance with the reliefs which may ultimately be granted by Courts in terms of the ratio of Durga Prasad (supra).
About the author: Abhimanyu Mahajan is an independent practitioner with over 25 years of experience specialising in commercial and civil litigation.
The author would like to thank his colleagues, Anubha Goel and Mayank Joshi for their inputs for this article.
All views expressed are personal.