Can a Subsequent Purchaser Who Pays Part Consideration After Notice Claim Exemption Under Section 19(b) of the Specific Relief Act?

Clarifying that deferred payments after notice of a prior agreement defeat good faith under Section 19(b) and that uncontroverted readiness and willingness suffices under Section 16(c); upholds the trial decree and reverses the first appellate decision, binding on Jharkhand’s subordinate courts and persuasive elsewhere.

 

Summary

Category Data
Case Name SA/78/1999 of SOBHAGMALL JAIN Vs UDAY LALSAHU And ORS.
CNR JHHC010085471999
Date of Registration 15-09-1999
Decision Date 25-08-2025
Disposal Nature Allowed
Judgment Author HON’BLE MRS. JUSTICE ANUBHA RAWAT CHOUDHARY
Court High Court of Jharkhand at Ranchi
Bench Single Judge
Precedent Value Binding authority for subordinate courts in Jharkhand
Overrules / Affirms Affirms trial court decree; overrules first appellate judgment dated 31-07-1999
Type of Law Civil – Specific Performance / Specific Relief Act
Questions of Law
  • Did defendants 2 & 3 have actual or constructive notice of the prior agreement?
  • Can they claim Section 19(b) exemption if part payments were made after notice?
  • Was plaintiff’s readiness and willingness under Section 16(c) sufficiently pleaded and proved?
Ratio Decidendi
  • A purchaser who learns of a prior sale agreement before paying full consideration cannot claim the “good faith” exception in Section 19(b).
  • Concealment of the purchase and failure to inquire—together with admission by the vendor in prior litigation—impute constructive notice.
  • Readiness and willingness under Section 16(c) are satisfied by uncontroverted pleadings, supported by a legal notice and evidence, even if the exact funds are deposited only after court direction.
Judgments Relied Upon
  • 1968 BLJR 28 (Patna HC)
  • AIR 1987 Pat 5
  • R.K. Mohammed Ubaidullah v. Hajee C. Abdul Wahab (2000 6 SCC 402)
  • Sinna Ponnu v. Singaru Odayar (1968 SCC OnLine Mad 134)
Logic / Jurisprudence / Authorities Relied Upon
  • Section 16(c) & Explanation 2(c) of the Specific Relief Act
  • Section 19(b) of the Specific Relief Act
  • Principles of constructive notice under Transfer of Property Act
  • Requirement of full consideration for “good faith” exemption
Facts as Summarised by the Court
  • Aug 1979: plaintiff & vendor executed agreement to sell plot 597 for ₹40,000 (₹1,000 paid).
  • Jan 25 1980: vendor sold to defendants 2 & 3 for ₹45,000 (₹10,000 paid each).
  • Jun 27 1980: plaintiff’s registered notice demanding performance.
  • Trial court decreed specific performance; first appeal reversed; second appeal restored decree.
Citations 2025 JHHC 25223

Practical Impact

Category Impact
Binding On All subordinate courts in Jharkhand
Persuasive For Other High Courts in India
Overrules Judgment of the 1st Appellate Court in T.A. No. 27/88 dated 31-07-1999
Distinguishes Cases denying constructive notice solely because vendor remained in major possession (e.g., AIR 1987 Pat 5)
Follows Patna HC decisions in 1968 BLJR 28 and AIR 1987 Pat 5 regarding constructive notice

What’s New / What Lawyers Should Note

  • Clarifies that part payment made after notice of a prior sale agreement cannot qualify as “good faith” under Section 19(b).
  • Holds that deliberate concealment of purchase and failure to inquire imputes constructive notice.
  • Reaffirms that uncontroverted pleadings and evidence of readiness and willingness under Section 16(c) suffice, even if funds are deposited only after a court directive.
  • Emphasizes that deposit of balance consideration in execution of a decree complies with Explanation 2(c) of Section 16.
  • Warns practitioners to scrutinize the timing of payments and inquiries in specific-performance proceedings.

Summary of Legal Reasoning

  1. Interpreted Section 19(b): exemption unavailable if purchaser pays full consideration only after learning of prior agreement.
  2. Assessed constructive notice: concealment by defendant 2 & 3 and vendor’s own admissions in prior litigation demonstrate knowledge.
  3. Applied Section 16(c): readiness and willingness need only be averred, remain uncontroverted, and be backed by notice and conduct.
  4. Distinguished Patna HC precedents: vendor’s continuing possession does not absolve a purchaser of inquiry obligations.
  5. Confirmed that full payment timing is critical for “good faith” in specific performance cases.
  6. Restored trial court’s decree, reversing the first appellate decision.

Arguments by the Parties

Petitioner (Plaintiff)

  • Defendants 2 & 3 had actual and constructive notice of the August 1979 agreement.
  • Written statement in prior suit (July 1980) confirmed vendor’s admission of the sale agreement.
  • Part payments made in 1981 demonstrate lack of good faith under Section 19(b).
  • Plaintiff’s readiness and willingness was uncontroverted: shown by legal notice and continuous efforts; deposit of ₹39,000 ordered and made.

Respondents (Defendants 2 & 3)

  • Registered sale deeds and delivery suffice to transfer title; deferred payments valid under Transfer of Property Act.
  • Balance payments made in good faith, after vendor vacated premises; no actual notice of prior agreement.
  • Vendor’s possession excused further inquiry; readiness and willingness issue immaterial once sale deed executed.
  • No denial of readiness and willingness in pleadings; first appeal validly refused to consider it.

Factual Background

In August 1979 the plaintiff and vendor agreed to sell plot 597 for ₹40,000 (₹1,000 paid; vendor granted possession of a small portion). On January 25 1980 the vendor executed registered sale deeds in favor of defendants 2 & 3 for ₹45,000 (₹10,000 paid each). The plaintiff gave a registered notice on June 27 1980 and filed TS No. 43/1981 for specific performance. The trial court decreed performance; the first appellate court reversed; the High Court’s second appeal restored the decree.

Statutory Analysis

  • Section 16(c) SRA requires that a plaintiff aver and prove performance or continuous readiness and willingness; Explanation 2(c) allows deposit of money upon court direction instead of tender.
  • Section 19(b) SRA bars enforcement against a transferee for value who has paid full consideration in good faith and without notice; “good faith” is defeated by payments made after notice of the original contract.

Alert Indicators

  • 🚨 Breaking Precedent – Tightens Section 19(b) “good faith” test to require full payment before notice.
  • ✔ Precedent Followed – Patna HC’s rules on constructive notice (1968 BLJR 28; AIR 1987 Pat 5).
  • 📅 Time-Sensitive – Emphasizes timing of payments under Specific Relief Act.

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