Supreme Court: Sale Deed cannot be Cancelled Due to Non-Payment of Full Consideration

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A Division Bench comprising of Justice Indu Malhotra and Justice L.Nageswara Rao heard the case of Dahiben v. Arvindbhai Kalyanji Bhanusali. The Apex Court remarked that it is a classic case, where the plaintiffs drafted the plaint. It is an attempt to make an illusory cause of action, and bring the suit within the period of limitation.

Brief facts of the case

The plaintiffs had a plot of agricultural land which had restrictions under Section 73AA of Gujarat Land Revenue Code, 1979. The Collector permitted the sale of property subject to terms and conditions under the said provision. They sold the suit property to Respondent No.1 by a registered Sale Deed dated 02.07.2009. Respondent No.1 issued 36 cheques for Rs.1,74,02,000 towards payment of the sale consideration. The Respondent No.1 further sold this suit property to Respondent No.2 and 3 in 2013.

On 15.12.2014, the plaintiff filed a suit against the Respondent no.1 as well as the later purchasers. The Plaintiffs alleged non-payment of a part of the sale consideration in the plaint. They prayed for the relief of cancellation of the Sale Deed on this ground.

The Lower Courts held that the suit was barred by limitation since it was filed after the period of limitation of three years. It was also rejected under Order VII Rule 11 of the CPC. Hence the plaintiffs filed the present appeal.

Petitioner’s Arguments

The Plaintiffs contended that they were illiterate. They were only able to put their thumb impression on the Sale Deed. The Respondent had paid only Rs. 40,000 through 6 cheques, and remaining 30 cheques for Rs.1,73,62,000 were “bogus” cheques. Thus, the Plaintiffs prayed for cancellation of the Sale Deed dated 02.07.2009.

Besides, it is also stated that the period of limitation commenced on 21.11.2014. This was when they obtained a copy of the index of the Sale Deed dated 02.07.2009.

Respondents’ Arguments

Respondent No.2 and 3 filed an Application for Rejection of the plaint under Order VII Rule 11 (a) and (d) of the CPC. They contended the limitation barred the suit filed by the plaintiffs. In fact, no cause of action has been revealed. The plaintiffs have admitted the execution of the Sale Deed. The dispute is only about not receiving a part of the consideration. They then claimed that the present complaint was incorrect.

Supreme Court’s View

The Court noted that the statements in the plaint are contradictory to that of the Sale Deed. The Sale Deed stated that the entire sale consideration was “paid” by Respondent No.1 to the Plaintiffs during the period between 07.07.2008 to 02.07.2009.

It questioned the Plaintiffs’ silence for a period of over 5 and ½ years. No legal notice for payment of the unpaid sale consideration was issued nor was any proceeding instituted for the recovery of the amount till December 2014.

The Bench explained the term “sale” according to Transfer of Property Act, 1882. The non-payment of a part of the sale price would not affect the validity of the sale. The Bench stated that the Plaintiffs may have other remedies in law for recovery of the balance consideration. However, the relief of cancellation of the registered Sale Deed could not be granted.

The Court also asserted that the receipt of the index would not constitute the cause of action for filing the suit. Instead, it is on the non-payment of the bulk of the sale consideration which occurred in the year 2009. The Bench stated, “The Plaintiffs took the plea to create an illusory cause of action, to overcome the period of limitation.”

It observed that the Collector’s permission was based on the fulfilment of certain conditions. The plaintiffs did not move to revoke the permission, nor did they file a complaint with the Collector. The prayer made by the plaintiff omits the date of Sale Deed execution on 02.07.2009. However, it included the date of the next Sale Deed. The Bench remarked that this was an attempt to mislead the court on the issue of limitation.

Court’s Decision

The Court affirmed the decisions of Trial Court and Gujarat High Court. The suit filed by the Plaintiffs is vexatious, meritless, and does not disclose a right to sue. The plaint is liable to be rejected under Order VII Rule 11 (a). Besides, the present suit is also barred by limitation under Article 59 of the Limitation Act, 1963. The Apex Court imposed a cost of Rs. 1,00,000 on the Plaintiffs for the abuse of process of the Court.


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