An agreement to sell does not convey ownership rights or confer title: Supreme Court
Title: Munishamappa v. M. Rama Reddy & Ors.
Citation: CIVIL APPEAL NO. 10327 OF 2011
Decided on: 02.11.2023
Coram: Justice Vikram Nath and Justice Rajesh Bindal
Introduction
The Supreme Court reaffirmed that an agreement to sell does not transfer ownership rights or grant any title. The bench, consisting of Justices Vikram Nath and Rajesh Bindal, emphasized that an agreement to sell is not a conveyance, and it does not transfer ownership rights or grant any title. Consequently, the bench concluded that the Karnataka Prevention of Fragmentation and Consolidation of Holdings Act, 1966, did not prohibit the agreement to sell in question.
Facts of the case
The civil appeal, initiated in 2011 at the Supreme Court, centered around an agreement to sell executed in 1990. The agreement was made with the expectation that the Fragmentation Act, which was eventually repealed in 1991, would no longer be in effect. Subsequently, when there was a refusal to execute the sale, the defendants filed a suit seeking specific performance of the contract. Although the trial court rejected the suit, the first appellate court ruled in its favor. In the second appeal, the High Court overturned the judgment of the first appellate court, dismissing the suit. The High Court held that the agreement was prohibited under the Fragmentation Act.
Court’s observation and analysis
The Supreme Court observed that Section 5 of the Fragmentation Act specifically prohibits the lease, sale, conveyance, or transfer of rights. Given that an agreement to sell does not establish any rights on the land, the Court concluded that it cannot be restricted by the Act. Additionally, the Court highlighted that the suit was filed subsequent to the repeal of the Fragmentation Act, and therefore, the appeal was allowed. It is pertinent to mention that Section 54 of the Transfer of Property Act explicitly states that a Contract for Sale, by itself, does not generate any interest or charge on the property.
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Written by- Amrita Rout