Kerala High Court: No 'Defective Title' Defence Allowed After Property Agreement

Kerala High Court: No 'Defective Title' Defence Allowed After Property Agreement

The Kerala High Court recently deliberated upon whether a vendor who engages in a property sale agreement can assert the defence of lacking conveyable title in a specific performance claim.

Justice Sathish Ninan ruled that once a vendor has committed to an agreement to transfer the property, it is not within their purview to contest a claim for specific performance by asserting the absence of a conveyable title. The decision lies with the purchaser to decide whether they are inclined to accept the rights that the vendor possesses.

The dispute revolves around an agreement that was made between the involved parties. According to this agreement, the defendant undertook the commitment to transfer specific property to the plaintiff in exchange for a sale consideration amounting to ₹30.50 lakh within four months.

In line with the plaintiff's account, an aggregate sum of ₹20.25 lakh was disbursed, subsequently granting the plaintiff partial possession of the property. In response, the plaintiff initiated legal proceedings, asserting that the defendant is deliberately avoiding the fulfilment of the specific performance stipulated in the agreement. On the other hand, the defendant has also submitted a counterclaim, seeking to regain possession of the portion of the property.

The defendant acknowledged the existence of the agreement and confirmed receiving an advance payment of ₹20 lakh. The defendant's argument contended that the plaintiff did not demonstrate readiness and willingness to fulfil the terms of the agreement. Additionally, it was claimed that the property's description provided in the plaintiff's statement was inaccurately presented. Furthermore, the defendant contended that the designated property for transfer is not legally transferable due to certain restrictions in place, prohibiting its transaction.

The trial court rejected the request for specific performance but approved the alternative plea for the reimbursement of the initial sale payment. In response to this trial court decision, appeals were lodged with the High Court to contest the ruling. Subsequently, both appeals were jointly reviewed and addressed by the High Court.

The High Court deliberated upon the defendant's assertion that he lacked adequate title to transfer the specific land as agreed upon in the contract. The Court ruled that in a specific performance lawsuit, once an agreement to sell has been established, the vendor cannot subsequently invoke a defence based on the absence or defectiveness of their title.

The Court cited a precedent from the full bench of the Madras High Court, as highlighted in Baluswami Aiyar v. Lakshmana Aiyar & Ors., AIR 1921 Mad 172, along with several other rulings. These references were made to establish that the defendant-vendor is precluded from utilizing a defence based on the absence or inadequacy of their title.

“Therefore, the defendant-vendor cannot challenge the claim for specific performance on the plea of defective title or absence of title,” the Court observed.

Another significant matter presented to the Court was the extent of the property outlined in the agreement between the involved parties. The Court noted a disparity between the property's extent specified in the agreement and the land being sought by the plaintiff for the purpose of specific performance.

In this context, the Court emphasised that a suit for specific performance is intended to exact precise compliance with the established contract. The plaintiff is not entitled to demand enforcement of property or terms that deviate from the agreed-upon terms. In the present case, the plaintiff has requested a decree concerning a property that is not stipulated for conveyance under Ext.A1. Consequently, the plaintiff is ineligible for a specific performance decree.

After evaluating the presented evidence, the Court observed that the plaintiff's readiness to fulfil the agreement and make the outstanding payment was contingent upon the defendant consenting to convey a larger portion of property than initially stipulated in the agreement. The plaintiff sought this additional property to expand the pathway leading to the property specified in the agreement. Furthermore, there existed uncertainty regarding the precise extent of the property sought by the plaintiff from the defendant to satisfy the agreement's terms.

“When there is ambiguity regarding the extent there could not be a relief for specific performance. The property must be certain and definite (See Nahar Singh v. Harnak Singh and Ors, 1996 6 SCC 699, Vimlesh Kumari Kulshretha v. Sambhajirao and Ors., (2008) 5 SCC 58, Sreekumar M.K. v. Ramadasan and Ors., 2017 (3) KLJ 798),” Court said.

The Court observed that the plaintiff did not demonstrate a genuine intent to fulfil the terms of the agreement they entered into. As the plaintiff insisted on obtaining additional property beyond the originally agreed terms, he was unwilling to proceed with the agreement without this concession. Consequently, the Court determined that the plaintiff's failure to execute the agreement was a result of his actions, attributing the non-performance to the plaintiff's fault.

The High Court upheld the dismissal of the appeals and affirmed the trial court's decision, which had rightfully rejected the plea for specific performance and instead granted a decree for the reimbursement of the initial advance sale consideration.