Mere Agreement to Sell Does Not Constitute Sale: High Court Reinstates Defense in Land Dispute, Emphasizes

The Bombay High Court at Aurangabad recently overturned a trial court's order that had struck off the defense of the appellants in a land dispute case. The judgment, delivered by Justice Sandipkumar C. More, underscores the necessity for courts to carefully scrutinize evidence before making decisions that can significantly impact the parties involved.

The appellants, Ashok Bhaurao Patil, Jayram Nathuji Salunke, and Santosh Wamanrao Patil, were defendants in Special Civil Suit No. 160 of 2001, filed by Rajendrakumar Madanlal Kala and others for specific performance of a contract regarding agricultural lands in Nakshtrwadi, Aurangabad. The plaintiffs sought temporary injunctions to prevent the defendants from selling or alienating the property, which the trial court granted in 2002.

Despite the appellants' undertaking in 2004 not to sell or transfer the property without court permission, they later entered into an agreement to sell part of the land to M/s Aishwarya Constructions. This led to the plaintiffs filing an application to strike out the appellants' defense, arguing that the agreement breached the court's order.

The core issue revolved around whether the appellants' execution of an agreement to sell constituted a breach of their undertaking to the court. The trial court had relied on additional handwritten notes in the agreement, which indicated that possession of the land had been handed over upon receipt of partial payment. However, these notes were disputed by the appellants.

Justice More emphasized that striking out a defense is a drastic measure that should not be taken lightly. The court must rely on clear and reliable evidence. The presence of three different versions of the agreement, with discrepancies regarding the handwritten notes, raised questions about the authenticity of the evidence presented by the plaintiffs.

The High Court found that the trial court had erroneously relied on the contested handwritten notes without sufficiently verifying their authenticity. The court noted that one version of the agreement, presented as original and notarized, did not contain the disputed notes, casting doubt on the plaintiffs' claims.

The court reiterated that mere execution of an agreement to sell does not amount to an actual sale, transfer, or alienation unless it is followed by a registered instrument. The judgment referenced precedents, including the Supreme Court ruling in Kapilaben And Others vs. Ashok Kumar Jayantilal Sheth and the Bombay High Court decision in Gopikabai Nathuram Malewar vs. Bapurao Mahadeorao Surkar, which clarified that an agreement to sell does not create any interest or charge on the property.

Justice More stated, "The execution of a mere agreement to sell does not constitute a sale, transfer, or alienation. The court must rely on concrete and verifiable evidence before striking out a defense, as such actions have significant implications for the parties involved."

The High Court's decision to overturn the trial court's order and reinstate the appellants' defense underscores the judiciary's commitment to ensuring that decisions are based on reliable evidence. This judgment serves as a critical reminder of the importance of judicial prudence and the need for courts to meticulously evaluate the authenticity and credibility of evidence. The case will now proceed on its merits, providing an opportunity for both parties to present their arguments comprehensively.

Date of Decision: July 29, 2024

Ashok Bhaurao Patil & Others vs. Rajendrakumar Madanlal Kala & Others