Supreme Court Allows Appeal, Holds Agreement to Sell Does Not Confer Right Against Third Parties; Plaint in Land Suit Rejected

A bench comprising Justices R. Mahadevan and J.B. Pardiwala heard the Civil Appeal arising from SLP (C) No.13679 of 2022 and examined whether a suit based solely on an agreement to sell could be maintained against a third party in possession of the disputed land. The appeal challenged the High Court of Karnataka’s dismissal of a revision petition against the trial Court’s refusal to reject the plaint under Order VII Rule 11(a) and (d) CPC.

The Court allowed the appeal, set aside the High Court and trial Court orders, and held that the plaint in O.S. No. 25968 of 2018 was liable to be rejected under Order VII Rule 11(a) and (d) CPC. The Court emphasised that a contract of sale does not, of itself, create any transferable interest in immovable property and that rights under Section 53-A of the Transfer of Property Act were limited and did “not avail against a third party.” The Court, in its reasoning, observed: “Undoubtedly, a sale deed, which amounts to conveyance, has to be a registered document, as mandated under Section 17 of the Registration Act, 1908. On the other hand, an agreement for sale, which also requires to be registered, does not amount to a conveyance as it is merely a contractual document, by which one party, namely the vendor, agrees or assures or promises to convey the property described in the schedule of such agreement to the other party, namely the purchaser, upon the latter performing his part of the obligation under the agreement fully and in time... The protection under Section 53-A is not available against a third party who may have an adversarial claim against the vendor. Therefore, unless and until the sale deed is executed, the purchaser is not vested with any right, title or interest in the property except to the limited extent of seeking specific performance from his vendor. An agreement for sale does not confer any right to the purchaser to file a suit against a third party who is either the owner or in possession, or who claims to be the owner and to be in possession. In such cases, the vendor will have to approach the court and not the proposed transferee.” The Court concluded that the respondents’ plaint was “manifestly vexatious and meritless” and that further trial would amount to misuse of the judicial process.

Background The dispute involved a historic property held by the appellant, RBANMS Educational Institution, in continuous possession since 1905. The respondents filed O.S. No.25968 of 2018 seeking a permanent injunction to restrain the appellant from creating third‑party interests in the schedule property, relying on an agreement to sell dated 10.04.2018 and an alleged advance payment of Rs.75,00,000/-. The appellant moved under Order VII Rule 11(a) and (d) CPC to reject the plaint, contending that an agreement to sell did not confer any right against third parties and that title was disputed. The trial Court rejected the rejection application; the High Court set aside that order for reconsideration but ultimately dismissed the revision petition. This Court examined settled precedents including Rambhau Namdeo Gajre, Suraj Lamps, and K. Basavarajappa and held that an agreement to sell, in the absence of a registered sale deed, created only a personal right against the vendor and not a right enforceable against a third party in possession. The Court found multiple defects in the plaint: no privity with the appellant, absence of vendors as parties, the plaintiffs’ lack of possession, and suspicious cash payment allegations. The Supreme Court allowed the application under Order VII Rule 11 and rejected the plaint. The Court directed circulation of its procedural directions to High Courts, Chief Secretaries and Income‑Tax authorities and recorded that parties would bear their respective costs; it also cautioned against future misuse of process.

Case Details: Case No.: Civil Appeal No. 5200 of 2025 (Arising from SLP (C) No. 13679 of 2022) Case Title: The Correspondence, RBANMS Educational Institution v. B. Gunashekar & Another Appearances: For the Petitioner(s): [Not indicated in the judgment] For the Respondent(s): [Not indicated in the judgment]