An agreement to sell is not an instrument that can transfer ownership of property neither does it confer any title, the Supreme Court has ruled. “The agreement to sell is not a conveyance; it does not transfer ownership rights or confer any title,” a Bench of Justices Vikram Nath and Rajesh Bindal said in its order.
This observation was made by the apex court while allowing an appeal filed by one Munishamappa against a Karnataka High Court order in which it had dismissed the suit for specific performance of a contract in second appeal by respondents M Rama Reddy and others.
In this case the appellant and the respondent signed a sale agreement in 1990, following which the possession of the property was also given. However, since there was a prohibition on the sale of the property due to bar contained in Section 5 of the Karnataka Prevention of Fragmentation and Consolidation of Holdings Act, 1996, no sale deed was executed. Afte this law was repealed on February 5, 1991, the appellant requested the respondents to execute the sale deed. The latter refused the request.
“What is prohibited or barred under the Fragmentation Act was the lease/sale/conveyance or transfer of rights. Therefore, the agreement to sell cannot be said to be barred under the Fragmentation Act. The appellant filed the suit for specific performance after the repeal of the Fragmentation Act. The suit could have been decreed without there being any violation to the law once the Fragmentation Act itself had been repealed in February 1991. Further, the High Court did not hold that the suit was barred by Section of the Limitation Act. The First Appeal Court had considered this aspect and having decided the said issue in favour of the appellant, we need not go into that question at this stage. What is further noticeable is that the respondents received the full consideration and had also transferred the possession of the property in question, as such other defences may not be available to them. Even the issue of readiness and willingness on the part of the appellant would not be relevant,” the top court said in its order.
For all the reasons recorded above, the appeal deserves to be allowed, the SC said in its order dated November 2, 2023.
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